Phl expects narrower BOP surplus

MANILA, Philippines - The Philippines expects a narrower balance of payments (BOP) surplus this year as the global economy is expected to remain weak, curbing investor demand for risky assets from emerging markets.

BOP – which summarizes all inflows and outflows in an economy – is seen to post a surplus of $4.4 billion this year, sharply lower than last year’s $9.236 billion, the Bangko Sentral ng Pilipinas (BSP) said yesterday.

A surplus indicates more than enough resources to settle trade obligations and foreign debts.

“(The surplus) will continue to be driven by the positive economic narrative coming from the Philippines,” BSP Assistant Governor Ma. Cyd Tuaño-Amador told reporters in a briefing.

BSP director Zeno Ronald Abenoja, meanwhile, said the narrower surplus “takes into consideration the global developments” characterized by the ongoing debt crisis in Europe and fragile recovery in the US.

BOP is composed of current and capital accounts. The current account is seen to record a surplus of $7 billion this year, while the capital account may post an excess of $100 million, data showed.

According to the latest BOP report yesterday, surplus in the current account – which includes earnings from exports, remittances, and the business process outsourcing industry – soared by more than eight-fold in the first quarter to hit $3.4 billion.

Of its components, Abenoja said cash remittances are seen to grow five percent by year-end. As of April, money sent home by overseas Filipinos via banks already expanded 5.7 percent at $6.916 billion.

Exports and imports, meanwhile, may expand by 11 percent and 13 percent, respectively, this year.

While trade forecasts may not be compared to actual government data, Amador said the BSP expects “some exports” to drive the country’s external position. For instance, Abenoja said “double-digit” growths are seen in machinery, transport equipment and mineral shipments.

According to the National Statistics Office, exports plummeted by nearly eight percent as of April, while imports dropped by 7.4 percent as of March.

“We excluded (from the projections) those that do not include transfer of ownership…such as return shipments, temporary exports and imports and accounts in consignment basis,” BSP director Rosabel Guerrero said in the same briefing.

On the capital account, Abenoja said the central bank still sees a net inflow in both foreign direct (FDI) and portfolio investments this year, despite the recent financial market turbulence.