The central bank now expects dollar outflows due to the Philippines’ trade imbalance to rise by over three times its original forecast as the value of the country’s imports continues to outpace what it earns from exports.
In a press briefing over the weekend, officials of the Bangko Sentral ng Pilipinas said the country’s current account would likely end the year at a deficit of $3.1 billion, equivalent to 0.9 percent of gross domestic product.
This represents a 342-percent increase over the original deficit projection of $700 million that its economists announced in late 2017.
“This mainly reflects the projected wider trade deficit as growth in goods imports largely outpaces exports growth,” the BSP said. “Shipments of imported goods are anticipated to gain further traction in 2018 following the momentum seen in the last quarter of 2017.”
Imports are now expected to grow by 11 percent, from the December 2017 projection of 10 percent.
Because of this, the BSP expects the country’s overall balance of payments — the aggregate net value of all transactions for goods and services with the rest of the world — to hit a deficit of $1.5 billion by the end of 2018.
This is equivalent to 0.4 percent of GDP and represents a 50-percent increase over the original BOP deficit forecast of $1 billion originally set in December 2017.
The higher projected dollar outflows means the peso will likely weaken further against the US dollar in the second half, according to traders.
Already, the peso closed the trading session last Thursday at P53.27 to a dollar—its lowest level in 12 years.