BoP deficit to hit P1.5B this yr – BSP

The country will likely post a substantially higher balance of payments (BoP) deficit this year, the Bangko Sentral ng Pilipinas (BSP) announced on Thursday.

A greater current account deficit could lead to an overall BoP deficit of $1.5 billion, the Bangko Sentral said in a statement, much higher than the previous forecast of $1 billion.

The latest payments balance projection is equivalent to 0.4 percent of the country’s gross domestic product (GDP).

In 2017, the country’s BoP position ended in a deficit of $863 million.

The current account — a major component of the balance of payments — is expected to hit a $3.1-billion deficit this year, equivalent to 0.9 percent of GDP and also much higher than the previous estimate of $700 million.

The current account consists of transactions in goods, services, primary income and secondary income, and measures the net transfer of real resources between the domestic economy and the rest of the world.

“This mainly reflects the projected wider trade deficit as growth in goods imports largely outpaces exports growth,” the central bank said of the revised forecast.

Data released on Thursday put the current account deficit at $208 million in the first quarter, 75.8 percent lower compared to the $860 million recorded a year earlier.

In a briefing on the first quarter current account result, BSP Department of Economic Statistics director Redentor Paolo Alegre Jr. said it “was brought about by higher net receipts in the trade-in-services, primary and secondary income accounts, which partially offset the deficit in the trade-in-goods account.”

The BSP said imports were expected to gain further traction in 2018 following the momentum seen in the last quarter of 2017.

Inbound shipments were forecast to grow by 11.0 percent, up from the December 2017 projection of 10.0 percent.

Merchandise exports, meanwhile, are expected to post 10.0 percent growth, also higher than the previous forecast of 9.0 percent,

“The current account will continue to draw support from the steady inflows of overseas Filipino remittances as well as business process outsourcing and tourism receipts,” the BSP said.

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