BSP sees higher BOP surplus in 2016

MANILA, Philippines – The Bangko Sentral ng Pilipinas (BSP) is looking at a higher balance of payments (BOP) surplus in 2016 on the back of increased investments and sustained resilience of recurring sources of income.

Zeno Ronald Abenoja, director of the BSP’s Department of Economic Research, said the country’s BOP surplus is seen hitting $2.2 billion or 0.7 percent of gross domestic product (GDP) next year, higher than the projected $2 billion or 0.6 percent this year.

The BOP shows a summary of a country’s transactions with the rest of the world. Components include trade, foreign direct and portfolio investments, and even remittances from Filipinos abroad.

A surplus means more money went into the economy, while a deficit means otherwise.

Abenoja said the central bank is looking at a lower current account (CA) surplus of $5.7 billion or 1.7 percent of GDP next year from the revised $8.9 billion or three percent of this year

The revision in the figures next year was caused by the downward revision in the global growth outlook for 2016 but higher than in 2015, he said.

According to Abenoja, the BSP also considered the increase in international oil prices.

Factored in the 2016 outlook included the easing volatility in global financial market after the US Federal Reserve raised interest rates by 25 basis points the other day.

He also cited the continued favorable growth prospects for the domestic economy.

Meanwhile, BSP Deputy Governor Diwa Guinigundo reported that the country’s BOP position reverted  to a deficit in November amid heightened uncertainty on the impending interest rate lift off in the US.

 The country booked a BOP deficit of $141 million in November, a complete reversal of the $469 million surplus registered in October.

Last month’s deficit was also lower than the $314 million deficit incurred in November last year.

Guinigundo said the deficit last month was caused by the continued debt servicing by the national government amounting to nearly $200 million.

The BOP surplus stood at $2.14 billion from January to November this year, a complete reversal of the $3.72 billion deficit booked in the same period last year.

As early as October, the country has surpassed the full-year target of $2 billion.

The country’s CA surplus declined by 18.7 percent to $5.6 billion in the nine months to September due to weak global trade.

Balance in trade in goods plunged 20.9 percent to $13.8 billion while that of services jumped 16 percent to $1.6 billion.

This prompted monetary authorities to lower its CA surplus forecast to $8.9 billion or three percent of GDP instead of $14.2 billion or 4.4 percent of GDP this year.