BSP sees higher current account surplus this year

MANILA, Philippines - The Bangko Sentral ng Pilipinas (BSP) is expecting a higher current account surplus this year on the back of recovering merchandise exports as well as robust imports despite the fragile global economic growth and debt crisis in Europe.

BSP Deputy Governor Diwa Guinigundo said the central bank is now projecting a current account surplus of $4.6 billion instead of $4.3 billion this year as it decided to retain its export and import growth targets.

The government is sticking to its targets of a 10 percent growth in merchandise exports to $52 billion this year and 12 percent growth in imports to $70.2 billion this year.

Merchandise exports went up by 5.5 percent to $12.7 billion in the first quarter of the year while imports rose 4.9 percent to $16.7 billion.

He pointed out that higher imports consisting of capital equipment, minerals and lubricants as well as raw materials would translate to higher exports in the coming months.

“We are more optimistic,” Guinigundo stressed.

BSP’s Department of Economic Statistics director Rosabel Guerrero reported that the current account surplus declined 8.1 percent to $882 million in the first quarter of the year from $960 million in the same quarter last year.

 “The surplus in the current account was sustained by net receipts in current transfers and services, which more than compensated for the higher net payments in the income account and the widening of the trade-in-goods deficit,” she said.

Guerrero pointed out that the trade-in-goods deficit widened slightly by 2.2 percent to $4 billion compared to the $3.9 billion deficit posted last year while net receipts in trade-in-services increased 12 percent to $1.1 billion from $956 million as a result of higher net receipts in BPO-related transactions.

On the other hand, she said the income account recorded higher net payments amounted to $256 million compared to $99 million due to increased net payments in investment income which more than offset the higher earnings of resident overseas Filipino workers.

She added that net receipts in current transfers amounted inched up 1.3 percent to $4.1 billion from $4 billion due to the steady remittance flows from non-resident overseas Filipinos.

The BSP believes that the higher growth in current account surplus would come from higher capital and financial account that booked a net inflow of $962 million in the first quarter or 73.7 percent lower than the $3.7 billion booked in the same quarter last year.

 “Capital inflows moderated during the quarter, reflecting continued concerns over the sovereign debt crisis in some parts of Europe,” she said.

According to her, the downgrade of sovereign credit ratings of some European countries by Standard and Poor’s in January and by Fitch Ratings and Moody’s Investors Service in February resulted in some volatility in the market that caused risk aversion among investors.