A sharp decline in the amount of imports helped the Philippines earn more dollars than it spent in the first half of the year despite the flight of capital from the local economy due to the COVID-19 pandemic, according to the central bank.
In a briefing over the weekend, officials of the Bangko Sentral ng Pilipinas (BSP) said this situation was felt most acutely during the second quarter of 2020, when business activity ground to a halt as the government imposed a broad lockdown to slow the spread of the virus that causes COVID-19.
The favorable outturn in the second quarter balance of payments position brought the cumulative surplus for the first half of 2020 to $4.1 billion, which was lower than the $4.8-billion surplus registered in the same period last year.
“This decline in the surplus was due to the reversal of the financial account to net outflows,” the central bank said, explaining that portfolio investments reversed to net outflows on concerns of a global economic slowdown amid the ongoing pandemic.
Other investments registered higher net outflows due largely to residents’ net repayment of their liabilities. However, these outflows were mitigated by higher net inflows in direct investments.
Meanwhile, the current account posted a surplus, a turnaround from the previous year’s deficit, attributed mainly to the narrowing of the deficit in the trade in goods account.
“This may be attributed to disruptions in the global demand and supply chains as countries imposed restrictions to contain this health crisis, which negatively impacted the country’s exports and imports of goods,” the BSP said. —Daxim L. Lucas