BSP reviews BOP projections

MANILA, Philippines - The Bangko Sentral ng Pilipinas is still reviewing estimates for the balance of payments position this year and its components, BSP Governor Amando M. Tetangco Jr. said.

“The reassessment of the 2015 projections will take into account several key developments following the BSP’s earlier projection exercise in October 2014,” Tetangco said in an e-mail.

“These developments include, among others, the generally lower global growth outlook, more volatile financial flows emanating from the asynchronous monetary policies in advanced economies, sharp fall in oil prices, and differentiation by investors among EMEs (emerging markets and economies) based on their macroeconomic strength,” he added.

The International Monetary Fund, in its World Economic Outlook released January, cut global output projection by 0.3 percent to 3.5 percent this year, due to the limited prospects in China, Russia, the euro zone and Japan.

The IMF stressed the uncertainty about oil price movements and the timing of the rise of interest rates in the US pose as risks to global growth.

Meanwhile, global financial markets remain volatile given the divergence in monetary policy settings both among advanced economies and emerging markets.

The US Federal Reserve, for one, is widely expected to hike interest rates this year, in stark contrast with its counterparts in the euro area and in Japan which are implementing easing measures and additional stimulus to boost economic growth.

In Asia, the same can also be observed with regard to monetary policy settings as a number of banks reduced interest rates this quarter to fight deflation risks and pump their economies, while some chose to keep benchmark rates steady.

“The new set of the 2015 BOP projections will be completed by April 2015,” Tetangco said.

The BOP ended in a deficit of $2.879 billion last year, a reversal of the $5.085-billion surplus in 2013, due to investors’ rebalancing of portfolio following the US Fed’s reduction in its massive monthly purchases.

This is the first time the country recorded a BOP deficit after nine years in surplus.

Tetangco earlier said the central bank has forecast the BOP position to return to a surplus of $1 billion this year.