’12 current account surplus hits $7.1B

Increasing remittances, rise in export receipts cited


The country’s current account surplus increased slightly in 2012 in view of the continued rise in foreign exchange remittances and the recovery of the export sector.

The Bangko Sentral ng Pilipinas on FRiday reported that the current account posted a surplus of $7.1 billion in 2012, up from $7 billion in the previous year.

Current account is the sum of the balance of trade (export receipts minus payment for imports),  earnings on foreign investments less payments made to foreign investors, and cash transfers or remittances.  Surplus indicates that the foreign exchange inflows resulting from these transactions exceed foreign exchange outflows.

It is one of the three basic components of the country’s balance of payments (BOP), a  record of a country’s commercial transactions with the rest of the world.

Remittances hit a new high last year as global demand for Filipino workers remained strong despite economies woes in industrialized countries. Officials said demand from alternative labor markets, such as the Middle East, led the increase in the deployment of Filipino workers.

Money sent by migrants reached $21.39 billion last year, up by 6.3 percent from $20.12 billion in 2011.

The Philippines is the world’s fourth biggest recipient of remittances, next to China, India, and Mexico. There are presently more than 10 million Filipinos working offshore.

In the meantime, an improvement in the country’s export performance in 2012 helped boost the current account surplus. The Philippines posted $46.3 billion in export receipts in 2012, a 20.9-percent year-on-year growth, reversing the contraction in 2011.

Philippine exports declined in 2011 as global demand for non-essentials, led by electronics, fell amid economic problems in industrialized countries. Electronics products account for at least half of the country’s total export earnings.

The BSP also reported that the country’s financial and capital accounts, the other components of the BOP, posted a surplus of $136 million and $6.1 billion, respectively. The financial account surplus was up 4.6-percent year-on-year, while the capital account was up by 9.3 percent year-on-year.

Inflows recorded in the capital account were led by grants and donations to the Philippine government. Inflows recorded in the financial account were mainly foreign portfolio and direct investments.

According to the central bank, the robust inflow of foreign portfolio investments and foreign investments in the country’s business process outsourcing (BPO) sector fueled the growth in the financial account surplus.

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  • Hayek_sa_Maynila

    If the stats I’m looking at are correct, the current account surplus of the PHL shrank in 2012 vs. 2011 if taken as a percent of nominal GDP.

    This happened despite the rebound in exports and the sharp slowdown in imports.

    So if exports continue to underperform this year and imports start to surge, there is a big chance that the current account surplus will deteriorate again in 2013.

    To me, this means at least 2 things.

    First, the peso’s 6.8% appreciation last year was not justified as this was due largely to portfolio flows. A deteriorating current account position means we are becoming more dependent on external leverage to fund the economy’s growth.

    Another implication is that the international reserve build up of the BSP cannot be seen excessive at all. While today’s GIR can cover more than 15 months worth of imports and more than 5 times the country’s short term external debt, a sharp deterioration in the C/A surplus this year could mean that the sizeable GIR BSP will start to look small again.


    peso should not be allowed to strengthen further. In fact if the Cyprus crisis continues the peso should be allowed to weaken

    second, we should support the BSP’s purchases of the FX reserves, moreso that the costs of sterilization are no longer as great as before. (SDA now down to 2.5%)

    • Reymedina Fong

      well saiddddddddd

    • Chris

      “peso should not be allowed to strengthen further. In fact if the Cyprus crisis continues the peso should be allowed to weaken” – should? how do you that? manipulate the currency?

      • Hayek_sa_Maynila

        On the contrary, its not manipulation. Its just allowing the market to run on its own course during periods of uncertainty….If the crisis is Cyprus worsens, the monetary authorities may choose not to intervene in the market and just allow the peso to weaken. A similar episode happened in May 2012 when Greece was feared to be exiting the EU…the BSP appeared to have stepped in to stop the rise of the USD/PHP market towards the 44 level by selling some of its GIR in the local currency market.

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