BSP cuts trade, BOP surplus projections

DUE TO weak global trade in the first quarter, the Bangko Sentral ng Pilipinas has slashed its growth projections for merchandise exports and imports for this year.

Deputy Governor Diwa C. Guinigundo also said on Friday that the BSP was expecting the balance of payments (BOP) position by the end of the year to slightly taper to a $2-billion surplus from the earlier projection of a $2.2-billion surplus.

The BOP is a summary of all the businesses the country does with the rest of the world. A surplus means the amount of dollars that entered the economy that year was more than the amount that left.

As for growth in trade of goods, the BSP cut the outlook for exports to 3 percent from 5 percent previously, alongside a tempered growth outlook for imports to 7 percent growth from 10 percent earlier.

The BSP attributed the lower exports growth forecast to “the subdued outlook for the global economy and further decline in commodity prices,” while the tempered imports growth was due to “decline in energy and metal prices.”

The current account surplus projection was meanwhile raised to $5.8 billion or 1.9 percent of the gross domestic product by the end of 2016 from $5.7 billion as the BSP expects support from robust cash remittances from Filipinos overseas as well as business process out  sourcing and tourism revenues.

“While the projected surplus in the current account balance has been revised upward, the financial account is expected to reverse to an outflow from an initially projected slight inflow in 2016,” the BSP said in a statement.

The projected $500-million net outflow in the financial account by yearend reflected “the anticipated higher residents’ acquisition of financial assets abroad as the US Federal Reserve hiked its policy rate in end-2015 and is expected to do so in the second semester of 2016,” the BSP explained.

The projected yearend gross international reserves level was hence kept at about $82.7 billion, higher than 2015’s $80.7 billion and enough to cover nine months’ worth of imports of goods as well as payments of income and services.