The Philippines’ balance of payments (BOP) position, or the sum of transactions between the country and the rest of the world at a given time, is expected to hit a bigger deficit of $8.4 billion this year.
Based on emerging developments, the Bangko Sentral ng Pilipinas (BSP) said the outlook remained subdued as external risks have intensified compared to the last forecast round.
The BSP projected in June that the BOP deficit would end this year at $6.3 billion, or 1.5 percent of gross domestic product. The new forecast represents 2 percent of the economy.
According to the BSP, the country’s external dealings are expected to weaken amid global demand conditions.
Risks continue as economies deal with record-high inflation rates, more aggressive monetary policy tightening by major central banks, continued economic slump in China and the lingering Russia-Ukraine conflict, among others.
BSP senior director Redentor Paolo Alegre Jr. said in a briefing that these factors would continue to impede the country’s exports prospects, resulting in a wider trade deficit.
“While tighter global financial conditions are expected to restrain inward financial flows, there continues to be some optimism on the domestic front that could partly offset the impact of elevated external risks on the BOP,” Alegre said.
He cited the economy’s solid macroeconomic fundamentals with strong recovery momentum in the first half of this year following increased mobility and expanded vaccination coverage.
He noted an increase in foreign travel receipts, sustained resilience of overseas Filipinos remittances and business process outsourcing revenues and continued inflows from foreign direct investments.