The country posted a balance of payments (BOP) deficit for the fourth straight month in January, although at a narrower $9 million.
The Bangko Sentral ng Pilipinas (BSP) data released on Monday showed that last month’s BOP deficit was trimmed to its smallest since the country posted a $183-million deficit in October.
A deficit means the amount of dollars that left the economy was larger than those that came in.
“This is a carry-over of the negative sentiment we saw in December 2016. We don’t have yet the trade, services and financial components but the headline numbers indicate that debt payments by the national government and foreign exchange operations of the BSP brought about the small deficit during the month,” BSP Deputy Governor Diwa C. Guinigundo said in a text message to reporters.
“Some partial offsets were seen in the national government’s forex deposits as well as the BSP’s investments income from abroad. We expect a turnaround during the year on account of the country’s continued resilience and strong macroeconomic fundamentals,” Guinigundo added.
The BOP is a summary of all the businesses the country does with the rest of the world.
BOP data is tracked closely to ensure the supply of dollars in the economy remains ample, allowing the government and businesses to transact with the rest of the world.
The country sources its dollar income from, among others, remittances from Filipinos overseas, sales from exports of goods and services, and foreign investments and revenues from industries such as business process outsourcing and tourism.
The country uses the dollars it earns for the importation of goods, such as food and fuel, and also for external debt payments.
The country ended 2016 with a BOP deficit of $420 million.
For 2017, the BSP targets a BOP surplus of $1 billion even as the current account is seen further narrowing to $800 million. Imports were seen to grow 10 percent, outpacing the expected 2-percent growth in exports.
According to the BSP, the 2017 BOP position outlook was based on the following assumptions: A pickup in the global growth outlook, gradual increase in oil prices, less volatility in global financial markets and continued favorable growth prospects for the domestic economy.
Foreign direct investment net inflow was expected to hit $7 billion this year, while foreign portfolio investment could post a net outflow of $900 million.
Gross international reserves would likely rise to $84.7 billion in 2017, equivalent to 8.8 months of imports, while cash remittances from overseas Filipinos would further increase to $27.7 billion.
New data from the BSP also showed that optimism among investors resulted in a net inflow of so-called hot money in January, amounting to $301.33 million.
Inflows of foreign portfolio investment reached $1.147 billion last month, outpacing the $845.83 million in outflows.
As for forex reserves, these picked up to $81.044 billion in January partly as gold prices recovered at the start of the year.
The country’s gross international reserves as of end-January can cover 9.2 months’ worth of imports of goods and payments of income and services.