BSP lowers BOP, GIR projections for 2014
The Bangko Sentral ng Pilipinas (BSP) has lowered its external accounts projections for this year to reflect the current global volatile financial environment and its impact on the country’s foreign currency reserves, as well as a wider trade gap from higher imports.
BSP Governor Amando M. Tetangco Jr. yesterday said for 2014, they reduced the balance of payments (BOP) forecast from $3-billion surplus to $1.1 billion, still a surplus.
The current account, which has sustained nine years of excess position, is also seen to be much lower this year at $6 billion compared to the previous estimate of $10.4 billion.
Tetangco said they have also reduced the forecast for gross international reserves, which they now expect will end at $85.3 billion at the close of 2014, from an earlier forecast of $88 billion. As for net portfolio investment inflows, the BSP said this could also be lower at $1.5 billion from $2.1 billion.
Tetangco reiterated that all significant external account numbers are expected to be lower than previously projected not only because of the current financial environment, but also mainly because of the Philippines’ higher import requirements for this year for reconstruction projects following the November 8 super-typhoon’s Yolanda’s wreckage of Eastern Visayas region.
The latest current account surplus, which is as of end-March, amounted to $2 billion. The latest BOP data as of end-May showed a BOP deficit of $4.12 billion.
The BSP said earlier that the current account surplus – equivalent to 3.1 percent of GDP – showed “continued strength” and that it was supported by the increased earnings of overseas Filipinos.
At the end of 2013, the country’s current account surplus increased 35.6 percent to $9.4 billion compared to end-2012’s $7 billion.
The current account is part of the BOP tally, along with the capital account and the financial account.
A BOP deficit occurs when there are more imports than exports of goods, services and capital. The country is reporting a deficit mostly because of payments of maturing external obligations and increased imports to fuel economic growth.
The central bank’s monetary policies and tools employed have been able to cushion the economy from external shocks.
Tetangco has said many times these past months that they are prepared to counter risks the BOP. (Lee Chipongian)