Philippines expected to keep solid external position

MANILA — The Philippines is expected to keep a healthy external position despite the twin shocks of the pandemic and global geopolitical risks, thanks to the country’s reliable dollar engines, according to Moody’s Analytics.

Such was also the case for most in East Asia, which still ran current account surpluses over the past four years despite the disruptions, the Moody’s unit said in a report.

”Economies in East Asia have long run sizeable current account surpluses, which have turned them into major international creditors,” Moody’s said, adding: ”Thanks to large goods exports and profit receipts, most East Asian economies should keep running current account surpluses for years to come.”

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An economy’s current account captures all transactions involving credit and debt between a country and the rest of the world. It counts both trades in merchandise and services like BPO earnings, cash remittances, and tourism receipts.

A country running consistent surpluses becomes an international net creditor, while a country running deficits becomes a net borrower. Foreign investors keep close tabs on current accounts as large deficits can become a source of vulnerability.

The country posted a current account deficit of $1.7 billion in the first quarter, smaller by 60.6 percent compared with the gap recorded a year ago, the Bangko Sentral ng Pilipinas (BSP) reported. This development, the BSP said, reflected a narrowing merchandise trade deficit.

Moody’s said remittances from Filipinos overseas buoyed the Philippines, helping the country maintain its strong external position even during hard times.