Global economic woes seen to gnaw on external account

The Philippine deficit in the trade of goods with the rest of the world is expected to remain high as growth in exports weakens in 2023 due to recession in major global markets, according to Fitch Solutions.

The think tank thus revised its forecast on the narrowing of the country’s current account deficit to 4.7 percent of gross domestic product (GDP) in 2023 from the previous 4.5 percent.

Also, the country’s account of transactions with trade partners for full year 2022 is now estimated to have been at a deficit of 5.2 percent of GDP from the earlier forecast of 5 percent.

Fitch Solutions said that from January-September 2022 alone, the current account deficit likely reached 4.5 percent of GDP, the widest in two decades.

The Philippine Statistics Authority (PSA) will release the latest trade data on Jan. 10.

In the first 10 months, the country’s trade deficit had ballooned by 54 percent to $49.98 billion.

In October alone, export receipts surged 20 percent to $7.7 billion while imports grew by 7.5 percent to $11 billion.

While the current account deficit is still seen to narrow due to lower commodity prices and resilient remittance inflows, weakening global demand and sustained high import of capital goods are expected to keep the shortfall considerably larger than historical average.

—RONNEL W. DOMINGO INQ