This Philippine economy will see a sharp reduction in trade-related dollar outflow by the end of 2019 compared to 2018’s record-breaking current account deficit, thanks to a reduction in import receipts and stronger flow of foreign currency from expatriate Filipinos.
The Bangko Sentral ng Pilipinas (BSP) said the amount of dollars being used for trading with foreign parties was likely to be halved to $5.6 billion this year.
This matches the original projection of BSP planners of a $10.1 billion current account deficit by end of 2019 which they set last May before economic data started to turn in the Philippines’ favor.
In 2018, the Philippine economy experienced net outflow of $8.7 billion due to trade related transactions with the rest of the world — a record amount, thanks to the import of goods and services associated with the infrastructure buildup program of the Duterte administration.
“This year, we are likely to see a lower current account deficit due to a slowdown in imports, plus higher dollar receipts from abroad,” said Dennis Lapid, BSP Department of Economic Research director.
As a result, the country’s overall balance of payments—total tally of dollar transactions with the rest of the world—will likely see a $4.8-billion surplus by end of 2019 compared to the BSP forecast of a $3.7 billion surplus.
In the third quarter of 2019 alone, Philippine balance of payments had a surplus of $778 million, a turnaround from the $1.9 billion deficit in the same quarter of 2018.
Financial account registered lower net inflow, representing net borrowing by residents from the rest of the globe. It followed the reversal of portfolio investments to net outflow and the decline in net inflow from direct investments.