Current account surplus narrows to $933M

The country posted a lower surplus in its current account in the first quarter as the increase in the cost of imported goods forced it to shell out more foreign exchange.

The current account ended with a surplus of $933 million in the first quarter, down 23 percent from $1.2 billion in the same period last year, the Bangko Sentral ng Pilipinas reported Wednesday.

The current account shows the difference between the inflow and outflow of foreign currencies. These flows are those that come in the form of remittances, exports, imports, payments for services and transfers such as grants.

Rosabel Guerrero, director of the BSP’s statistics department, said in a briefing that the country paid more for imports due to the increase in the cost of raw materials and intermediate goods that were sourced from abroad.

Ms. Guerrero added that firms likewise increased the volume of their imports as they expected to sell more finished goods in the months ahead.

While growth in imports accelerated, the rise in exports decelerated following the debt problems in export destinations such as the United States and many European countries that dampened demand for goods coming from emerging markets like the Philippines.

“Exports growth moderated during the quarter due mainly to lower shipments of electronics and machinery and transport equipment given the decline in both the demand for and export prices of consumer electronics and communication equipment,” the BSP said in a statement.

Electronics, particularly those used as inputs for finished consumer products like computers and cellular phones, are the country’s major export products.

The BSP said the country posted a trade deficit of $3.9 billion in the first quarter, up 36 percent from $2.9 billion in the same period last year.

Despite the decline in the surplus in the country’s current account, the overall balance of payments (BOP) surplus still grew year on year in the first quarter to $3.49 billion from $1.28 billion a year ago.

This was credited to the accelerated increase in the surplus in the country’s capital account. In contrast with the current account, the capital account covers inflow and outflow of foreign currencies in the form of direct investments and portfolio investments or “hot money” that usually found their way into local stocks.