The country’s balance of payments swung to a deficit in June after showing signs of recovery the month before, putting new BOP forecasts for the year at risk of being missed.
Data from the Bangko Sentral ng Pilipinas (BSP) showed the country’s BOP position at a deficit of $24 million in June, a reversal from the previous month’s $373-million surplus.
In June of last year, the country had a surplus of $692 million.
The BOP position is an accounting of all the business the country does with the rest of the world.
This includes investment flows, external trade, the entry and payment of foreign obligations, and revenues from dollar-earning industries such as tourism and business process outsourcing.
Remittances from overseas Filipino workers (OFW) are also included in the BOP.
Earlier this month, the BSP said it expected the country to end the year with a BOP surplus of $1.1 billion. June’s BOP, however, brought the country’s first semester deficit to $4.14 billion.
This means the country will have to post a surplus of over $5 billion in the remaining months of the year to meet the forecast.
The deficit in June came despite net inflows of foreign investments in local stocks and bonds.
Data released by the BSP this week showed hot money inflows reached $44 million last month.
The country’s reserves also rose slightly to $80.7 billion from $80.2 billion the month before.
A rise in the gross international reserves is usually predictive of a BOP surplus.
BOP forecasts were revised earlier this month in response to tumultuous financial market conditions that are keeping foreign money in safer havens.
Among the BOP components that were revised was the current account, which is the summary of all the country’s sources of recurring income such as remittances, and external trade.
The country is expected to end the year with a current account surplus of $6 billion, lower than the previous projection of $10.4 billion and last year’s $9.4 billion.
The lower surplus reflects higher imports, now expected to grow at 9 percent, versus the projected growth of exports of 6 percent. “(The increase in imports is from) the requirements of domestic companies, particularly electronics, and reconstruction efforts,” said BSP Governor Amando Tetangco Jr.