MANILA, Philippines – Recent developments in the five months to May affecting financial markets and the economy in general would be among incorporated in the updated Balance of Payments (BOP) position assumptions set to be released soon, the Bangko Sentral ng Pilipinas said.
Central bank Governor Amando M. Tetangco, Jr. said in an e-mail the BSP is finalizing the new forecasts following the first leg of its biannual review of the assumptions of the BOP and its components.
“The review [or] updates of the BoP projections are being finalized given the actual developments in both the domestic and external economic environment during the first five months of the year, including the shift in the direction of flows within this period,” Tetangco stressed.
In the first four months of the year, the country recorded a BOP deficit of $4.493 billion, a reversal of the $1.811-billion surplus recorded in the same period a year ago. The deficit was blamed partly to hot money outflows amid volatility in global financial markets after the US Federal Reserve started reducing its monthly asset purchases.
The BOP shows a summary of a country’s transactions with the rest of the world. Components include trade, foreign direct and portfolio investments, and even remittances from Filipinos abroad.
A surplus means more money went into the economy during the period, while a deficit means otherwise.
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“We observed that net portfolio investments have started to register net inflows in April and May, suggesting that investors have started to distinguish EMs (emerging markets) with better macroeconomic fundamentals and prospects,” Tetangco stressed.
“On the CA (current account), we continue to expect a surplus owing to remittances and receipts from the BPO (business process outsourcing) sector that we expect will remain healthy. We will provide details in due course,” he continued.
The BSP expects the BOP position to settle at a surplus of $3 billion for the year, with a current account surplus of $10.4 billion.
Foreign direct investments are forecast to amount to a net inflow of $2.6 billion, while net hot money inflow is seen summing up to $2.1 billion.
Merchandise exports are projected to reach $51 billion, while imports are seen hitting $66.5 billion. Remittances, meanwhile, are expected to rise five percent to $23.6 billion.
The BSP conducts a biannual review-one each semester-of the BOP targets to update the numbers with recent developments here and abroad.
