The country continued to register a current account surplus in the first half, but the amount was lower than the year-ago level mainly due to the widening trade deficit, the central bank reported Thursday.
According to the report, the current account surplus stood at $3.1 billion in the first half of this year, falling by $300 million from $3.4 billion in the same period last year.
The current account—one of the components of the balance of payments (BOP)—is a record of the inflows and outflows of foreign currency arising from imports, exports, remittances, payments for services, grants and other transfers.
BOP, meantime, is the record of all inflows and outflows of foreign currency to and from the country, including so-called “hot money” recorded in the capital account.
The Philippines registered a 4.4-percent growth in export earnings in the first half, the BSP said. However, the country still posted a trade deficit because the rise in imports was faster at 7.7 percent. This meant that the country had to pay more for imported goods than it earned from exporting its products.
Nonetheless, the BSP said the increase in imports could be seen favorably, especially since the rise in imports involved mainly raw material and intermediate goods, which are inputs for production. The increase in imports of these goods meant that companies were planning to increase production to meet expected higher demand, and this bodes well for employment creation and income generation.
The BSP said remittances remained strong in the first half despite the challenges confronting certain labor markets offshore. Problems include the high unemployment rate in the United States, debt woes in Europe and unrest in the Middle East and North Africa.
Also, the country’s capital and financial account, the other item under the BOP, posted a surplus of $3 billion in the first half, surging from a mere $309 million in the same period last year.
The BSP said the flow of foreign portfolio investments to the Philippines had been surging because of the same problems confronting the United States and Europe.