A logo of Bangko Sentral ng Pilipinas (Central Bank of the Philippines) is seen at their main building in Manila, Philippines March 23, 2016. REUTERS/Romeo Ranoco
MANILA — The Philippines is forecast to post another dollar surplus this year before falling to a deficit in 2025 on expectations that its trade gap would resume widening after shrinking this year.
In a statement on Friday, the Bangko Sentral ng Pilipinas (BSP) said the country is projected to end the year with a balance of payments (BOP) surplus of $700 million, better than the previous forecast of a $400 million surplus.
The revised outlook, however, was smaller than the $3.7 -billion BOP surplus that was actually recorded in 2023. In 2025, the BSP said the Philippines is expected to post a BOP deficit of $500 million.
“The emerging external outlook for 2024 and 2025 is largely underpinned by expectations of a slight improvement in global economic conditions, particularly for this year; and improvements in domestic demand conditions over the next two years,” the central bank said.
READ: Weaker external position seen in 2024 on tepid exports, tourism receipts
BOP summarizes economic transactions with the rest of the world during a certain period. A surplus arises when more foreign funds entered the economy against those that left, giving the country enough resources to pay its foreign debts and meet import requirements. A BOP deficit means the reverse happened.
More optimistic
Explaining its more optimistic outlook this year, the BSP said it expects a narrower current account deficit—which tallies trade in goods and services—and “modest” dollar inflows from foreign investments.
The central bank said the import bill is projected to rise by 4 percent this year, slower than the old estimate of 7-percent increase, as waning of pent-up demand and high borrowing costs would likely weigh on domestic consumption.
READ: Surprise export surge narrowed trade deficit in Jan
The BSP also tempered its growth forecast for exports to 3 percent, from 5 percent previously, after factoring in the latest projections of major exporters, which see a “flat growth” in outbound shipments of electronics, the top Philippine export product.
Meanwhile, the BSP kept its 2024 growth forecasts for BPO revenues and tourism receipts at 7 percent and 50 percent, respectively. The projected increase in cash remittances was also unchanged at 3 percent.
Lastly, the central bank downwardly revised its projection for foreign direct investments to a net inflow of $9 billion this year from the previous outlook of a $10-billion inflow. The BSP is also less upbeat on “hot money” or foreign portfolio investments, which are now expected to yield a net inflow of $1.3 billion, from the old forecast inflow of $1.7 billion.
“The BSP will continue to monitor closely emerging external sector developments and risks and how these may impact the BSP’s fulfillment of its price and financial stability objectives,” the central bank said. —Ian Nicolas P. Cigaral INQ