Current account deficit widens to $5.1 billion in Q2

MANILA, Philippines — The country’s current account deficit widened by 25 percent to $5.1 billion in the second quarter from $4.1 billion in the same period a year ago, due largely to the higher trade in goods gap, according to the Bangko Sentral ng Pilipinas.

BSP senior director Redentor Paolo Alegre Jr. said the shortfall was equivalent to -4.6 percent of gross domestic product in the second quarter from 3.9 percent of GDP in the same quarter in 2023.

“This development was driven by the expansion in the trade in goods gap and lower net receipts in trade in services. This was partly muted by higher net receipts in the primary and secondary income accounts,” Alegre said.

The country’s trade in goods deficit widened by 4.2 percent to $16.8 billion in the second quarter from $16.1 billion last year as exports declined while imports climbed.

Exports went down by 0.8 percent to $13.8 billion in the second quarter from $14 billion a year ago, while imports grew by 1.9 percent to $30.7 billion from $30.1 billion previously.

Net receipts in the trade in services account decreased by 13.6 percent to $3.4 billion from $3.9 billion due to higher receipts of travel services and financial services.

Primary income net receipts rose by 2.4 percent to $905 million in the second quarter from $883 million a year prior due to higher interest income receipts on reserve assets, direct investments and other investments.

Secondary income net receipts also registered a 2.3-percent growth to $7.4 billion from $7.2 billion on the back of sustained remittance inflows from non-resident overseas Filipino workers.

The financial account stood at a net inflow of $5.3 billion from April to June, significantly higher than the $204 million in 2023 due to the reversal of the portfolio investment account to net inflows from net outflows.

Meanwhile, the country’s current account deficit narrowed by 17.8 percent to $7.1 billion in the first half from $8.6 billion in the comparable year-ago period. This is equivalent to 3.2 percent of GDP.

“The lower current account deficit emanated from the narrowing trade in goods deficit and the higher net receipts in the primary and secondary income accounts. However, this was partly mitigated by the lower net receipts in trade in services,” Alegre said.

From January to June, the trade in goods deficit went down by 5.2 percent to $31.5 billion from $33.2 billion a year ago as exports rose by 5.4 percent to $28.2 billion while imports inched down to $59.7 billion from $60 billion.

Net receipts in trade in services decreased by 14.7 percent to $7.2 billion in the first half from $8.4 billion as payments grew by 27.3 percent, outpacing the 11.4 percent growth in receipts.

The primary income net receipts rose by 43.2 percent to $2.2 billion in the first half from $1.6 billion last year, while the secondary income net receipts increased by 2.6 percent to $15 billion.

This translated to a balance of payment surplus of $1.4 billion in the first half, lower than the $2.3 billion surplus recorded a year ago. In the second quarter alone, the country’s BOP surplus stood at $1.2 billion, a turnaround from the $1.2 billion deficit previously.