Philippines seen to end 2023 with BOP surplus of $1.1B

MANILA  -The country’s balance of payments (BOP) position for 2023 is now expected to register a surplus of $1.1 billion instead of a $100-million deficit that was forecast in September, thanks to heavier inflow of foreign debt and stronger growth of tourism receipts.

The reversal of the forecast represents more income from tourism-related activities on the one hand, but also more funds borrowed from foreign lenders on the other.

Sittie Hannisha Butocan, director of the economic research department of the Bangko Sentral ng Pilipinas, said in a press briefing that the latest forecast takes into account key downside risks coming from subdued global demand conditions, weak trade and investment prospects, lingering high interest rate environment, elevated inflation, and the escalation of geopolitical tensions in various parts of the world.

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Locally, risks that the actual BOP position will be worse than forecast come from a weaker-than-target gross domestic product outturn and higher-for-longer interest rate environment are among the key factors that could weigh on the country’s external outlook over the near term.

‘Positive reinforcements’

“Meanwhile, positive reinforcements to the country’s external sector continue to include the rebound in the global tech cycle supporting the recovery of electronics exports,” Butocan said.

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“The international lifting of the state of health emergency which will support both travel and the hiring of Filipino workers overseas, with the latter benefitting as well from labor shortages in countries challenged by an ageing population,” she added.

The updated BOP forecast for 2023 showed more inflows as the outlook for the country’s financial account—referring to liabilities owed to or inflows coming from foreigners—has been revised upward.

In particular, net inflows are now expected to reach $11.7 billion from $10.4 billion previously.

“This is reflective of the actual trend seen in the first nine months of year, particularly for the other investments account, underpinned by inflows from foreign loan availments that is partly in line with the government’s foreign borrowing plans,” Butocan said.