6-month BOP surplus swells to $6.29B

The surplus in the country’s balance of payments (BOP) surged to $1.27 billion in July, the Bangko Sentral ng Pilipinas reported on Friday.

Documents from the BSP showed that the BOP has been posting surpluses for the fifth month in a row, with the level swinging between $200 million and $2 billion each month.

The latest figure brought the BOP for the seven months to July to a surplus of $6.29 billion, or 82.8-percent higher than the surplus of $3.44 billion posted in the same period last year.

The BOP is a closely watched economic indicator because it shows a country’s level of foreign-exchange liquidity, which is necessary for it to engage in commercial transactions with the rest of the world.

Factors that help boost the country’s BOP include foreign investments, income from exports, remittances sent by overseas Filipinos and foreign currency-denominated loans extended to the government and income by the BSP from its investments abroad.

According to the BSP, remittances from overseas Filipinos coursed through banks in June reached a record monthly high of $1.7 billion. This brought the cumulative remittances during the first semester to $9.6 billion, an increase of 6.7 percent over the same period last year.

In a research note issued earlier this week, Singapore-based DBS Group said remittances from overseas Filipinos might not provide the usual strong push for the domestic economy in the coming months as the strong peso could dampen domestic consumption.

DBS said that with the outlook of the global economy still uncertain and policies negatively impacting on overseas Filipino worker deployment in Saudi Arabia, “remittance is unlikely to provide much tailwind to the domestic economy” in the coming months.

The BSP said the sustained demand abroad for Filipino workers as well as the diversity of their skills and destinations have contributed to the resilience of remittance flows.

This is despite the lingering uncertainties on the Middle East and North Africa region’s political situation and the euro zone sovereign debt crisis, the BSP added.