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.