BSP: Record high trade gap? No problem!

Strong dollar inflows into various sectors of the economy are helping the Philippines weather record high outflows of foreign exchange due to a yawning trade gap and, combined with other favorable factors, create a favorable investment climate for the country.

Thus said Bangko Sentral ng Pilipinas Deputy Governor Diwa Guinigundo who painted a bright picture of the country’s overall macroeconomic condition despite authorities’ expectations of the current account hitting $10.1 billion by the end of 2019—its highest level in history.

“There is a positive story about the Philippines’ external payment position in that it has remained manageable despite the deficit in the current account,” said the central bank deputy chief in highlighting the achievements of the Duterte administration.

Guinigundo—who will step down on Tuesday upon reaching the mandatory retirement age of 65—stressed developments in the monetary, external and financial sectors before businessmen, analysts and members of the diplomatic corps during the government’s briefing on Monday ahead of the President’s annual address to Congress.

On the external front, Guinigundo cited robust foreign exchange inflows, such as foreign direct investments, business process outsourcing revenues, remittances and tourism receipts, which provide strong buffer against shocks.