BSP expects recovery in PHL’s current, financial accounts on better global growth prospects

A ranking Bangko Sentral ng Pilipinas (BSP) official expects a recovery of the Philippines’ current and financial accounts in the coming months on expectations of better global economic output for 2017. (Photo: Bangko Sentral ng Pilipinas/ Facebook)

MANILA–A ranking Bangko Sentral ng Pilipinas (BSP) official expects a recovery of the Philippines’ current and financial accounts in the coming months on expectations of better global economic output for 2017.

Any improvement in both the current and financial accounts will benefit the country’s balance of payment (BOP) position, which as of the end of the first quarter of the year registered a deficit of USD994 million.

Last March alone, the BOP registered a USD550 million deficit, higher than month-ago’s USD445 million deficit and the fifth consecutive month of a negative position.

BOP is the sum of a country’s total transactions with the rest of the world in a given time.

In a text message Wednesday, BSP Deputy Governor Diwa Guinigundo attributed the BOP deficit last March partly to the “reversal in foreign portfolio investments into a deficit.”

Central bank data show that foreign portfolio investments, otherwise known as hot money due to the speed it comes in and out of an economy, registered a USD409.01 million net outflow last February from month-ago’s USD301.33 million net inflows and the USD57.74 million net inflows in February 2016.

This after the USD 1.39 billion outflows in the second month this year surpassed the USD981.2 million total inflows for the month.

In the first week of March, hotmoney posted a net outflow of USD60.74 million, bringing the year-to-date level to a USD168.41 million net outflow.

Guinigundo said central bank’s foreign exchange operations, which is being done to address volatility in the exchange rate, and the national government’s payments of its maturing liabilities are other factors that contributed to the BOP deficit last March.

”For the first quarter 2017, the deterioration in the cumulative BoP shortfall was due to the persistent trade deficit that further deteriorated for the first two months of the year despite the good performance of exports (17.4 percent) versus imports (15.8 percent) for the Jan-Feb period,” he said.

Guinigundo, however, remains optimistic for the coming months.

”While we remain vigilant over the global economy which the IMF (International Monetary Fund) believes is better poised for higher growth in 2017, we expect some recovery in both the current account and the financial account particularly FDI (foreign direct investments) and foreign portfolio investments as the uncertainties appear to be easing a bit,” he added.