Philippines posts smaller BOP surplus in September

MANILA, Philippines — The Philippines posted a smaller balance of payments (BOP) surplus in September, reflecting subdued external inflows compared to last year, according to the Bangko Sentral ng Pilipinas (BSP).

The country recorded a BOP surplus of $82 million in September, sharply lower than the $3.5-billion surplus in the same month a year ago.

The BSP said the surplus reflected the central bank’s net income from its investments abroad and the national government’s net foreign currency deposits with the BSP.

Despite the weaker monthly surplus, the figure helped narrow the year-to-date BOP deficit to $5.32 billion from $5.4 billion in the January to August period.

“The smaller BOP surplus reflects fewer one-off inflows and a still-wide trade gap, but the external position remains manageable with steady remittances, strong services exports and solid reserves,” SM Investments Corp. chief economist Robert Dan Roces said.

Preliminary BSP data showed that the shortfall was largely due to the country’s continued trade in goods deficit, which reached $32.4 billion as of end-August, lower than the $34.3-billion deficit in the same period last year.

“As global rates ease and regional demand recovers, investment inflows may return and support liquidity and credit conditions, which should help firms with deep local roots and diverse sources of growth,” Roces added.

Security Bank chief economist Angelo Taningco noted that the shortfall was likely offset by sustained net inflows from personal remittances of overseas Filipinos, trade in services, foreign direct and portfolio investments as well as foreign borrowings by the national government.

“For the last three months of the year, we expect the BOP surplus to be maintained with our full-year BOP deficit forecast pegged at $4.5 billion,” Taningco said.

The BOP records all economic transactions between the Philippines and the rest of the world, serving as a key indicator of the country’s external position.

The BOP position mirrored the movement in the country’s gross international reserves (GIR), which increased by 1.9 percent to $109.1 billion as of end-September from $107.1 billion a month earlier.

The BSP said the latest GIR level remains an adequate external liquidity buffer, sufficient to cover 7.3 months’ worth of imports of goods and payments of services and primary income. It is also about 3.8 times the country’s short-term external debt based on residual maturity.

These foreign-denominated securities, foreign exchange and other assets including gold help finance imports and foreign debt obligations, stabilize the currency and provide a buffer against external economic shocks.

While the September surplus signals manageable external conditions, the lingering deficit underscores persistent trade challenges and the need to sustain inflows from remittances and investments to support the country’s external stability.