BOP Deficit Seen Smaller At $100 Million This Year

Due to a narrower current account gap, the Philippines' balance of payments (BOP) deficit for 2023 is expected to be lower at $100 million compared to the previous projection of $1.2 billion.

The Bangko Sentral ng Pilipinas (BSP) raised its BOP projection to $1 billion, indicating a surplus.

The Bangko Sentral ng Pilipinas (BSP) raised its BOP projection to $1 billion, indicating a surplus, from the previous $500-million deficit forecast announced in June this year due to expected recoveries in both the current account and financial account components of the BOP.

These improvements are driven by factors such as remittances, exports, imports, foreign direct investments (FDI), and portfolio investments, among others.

The BOP is a summary of the economic transactions of a country with the rest of the world for a specific period. It accounts for the economic dealings between residents and non-residents.

Since the pandemic, the BSP has been revising its BOP projections quarterly, compared to a pre-pandemic practice of reviewing external accounts twice a year.

Earlier, officials stated that the BSP's policy-making arm, the Monetary Board, approved the latest BOP projections, taking into account the latest available data and recent emerging developments.

As of end-July, the BOP reflects a surplus position of $2.207 billion, according to BSP Director Sittie Hannisha M. Butocan of the Department of Economic Research.

This projection is based on an expected narrower current account gap due to the anticipated contraction in goods exports and goods imports.

For this year, the BSP expects the current account to have a deficit of $11.1 billion, lower than the June forecast of $15.1 billion. Butocan explained, "The narrower current account deficit is driven by a contraction in both goods exports and imports amid sluggish external demand and a decline in commodity prices."

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