Current account surplus up 9.1% to $2.5 B in Q2

MANILA, Philippines - The country’s current account yielded a surplus of $2.5 billion in the second quarter, up 9.1 percent from $2.3 billion a year ago due to higher remittances from Filipinos abroad and a rise in exports, the Bangko Sentral ng Pilipinas (BSP) said yesterday.

The current account is the sum of the balance of trade, net income from abroad and net current transfers.

“The moderate growth in exports of goods was supported by sustained external demand from major export markets, particularly Japan, Singapore, Malaysia, the Netherlands and the UK,” department of economic statistics director Rosabel B. Guerero said.

Moreover, the surplus was driven by an expansion in remittances sent home by Filipinos abroad and growth in earnings of the business process outsourcing industry, she added.

In the first half of the year, the current account yielded a surplus of $5.6 billion, more than double the $2.7 billion recorded in the same period last year.

This also brought the balance of payments surplus to $2.6 billion, a sharp increase from the previous year’s $1.3 billion.

BSP Deputy Governor Diwa C. Guinigundo said the continued surplus in the BOP during the second quarter supports the view that the Philippines remained resilient against uncertainties abroad, particularly the impending tapering of the US Federal Reserve.

“The second quarter was a very volatile quarter due to the uncertainty of both the direction as well as the magnitude of the tapering of the quantitative measures of the US Fed,” Guinigundo said.

“We have to emphasize that through all those volatilities in financial markets, balance of payments continue to be in surplus. This speaks well for the ability of the economy to market its products and services abroad,” he continued.

The US Fed on Thursday announced it will stick to its massive bond buying program, giving markets a boost as investors sought for higher yielding assets.

Guinigundo said following the Fed’s decision to keep its program intact, a “re-flow” of capital to the Philippines is expected to be seen following weeks of sell-offs in the local markets.

“What we expect is a possible re-flow. I wouldn’t describe it immediately as surge. A possible re-flow can take place as the market consolidates its views on the recent decision of the US Fed,” Guinigundo said.