MANILA, Philippines — The country’s current account deficit more than doubled in the third quarter compared to a year ago amid a wider trade gap, according to the Bangko Sentral ng Pilipinas (BSP).
In press briefing, BSP senior director Redentor Paolo Alegre Jr. said the current account deficit widened to $5.7 billion in the third quarter from the $2.2 billion shortfall in the same period in 2023.
“The wider current account deficit was due to the widening merchandise trade gap due to a robust growth in domestic demand and a decrease in net receipts in trade in services,” Alegre said.
BSP data showed the country’s trade-in-goods deficit widened by 10.1 percent to $18.5 billion in the third quarter from $16.8 billion a year ago as import growth outpaced the decline in exports.
Exports decreased by 3.2 percent to $13.9 billion in the third quarter from $14.3 billion a year ago. Meanwhile, imports increased by 3.8 percent to $32.4 billion from $31.2 billion in the comparable year-ago period.
“Since we’re importing more and exporting less, our trade-in-goods deficit increased,” Alegre said. “We are importing more iron and steel, metalliferous ores and miscellaneous manufactures. We need more iron and steel for our infrastructure projects.”
Meanwhile, the decline in exports was caused by the decrease in electronic products amid the demand shift for more advanced semiconductors. These semiconductors are used for artificial intelligence applications and smarter mobile phones.
Net receipts in the trade in services account also fell by 36.3 percent to $3.3 billion in the third quarter from $5.3 billion a year ago.
Primary income net receipts inched down to $1.2 billion in the third quarter from $1.3 billion a year ago due to higher interest payments to non-residents.
On the other hand, secondary income net receipts edged higher to $8.2 billion from $8.1 billion, mainly driven by sustained remittance inflows from overseas Filipino workers.
The financial account stood at a net inflow of $10.5 billion from July to September, significantly higher than last year’s $2 billion.
Meanwhile, the country’s current account deficit widened by 19.4 percent to $12.9 billion in the first nine months from $10.8 billion in the same period last year.
“This was due to lower net receipts in trade in services, higher net receipts in primary and secondary income accounts and narrowing trade-in-goods deficit,” Alegre said.
From January to September, trade-in-goods deficit stood at $50 billion as exports rose by three percent to $42.4 billion while imports inched up by 1.3 percent to $92.4 billion.
Net receipts in trade in services decreased by nearly 24 percent to $10.4 billion in the nine-month period from $13.7 billion a year ago.
The primary income net receipts rose by 19 percent to $3.4 billion from January to September compared to $2.9 billion in the same period last year, while the secondary income net receipts increased by 2.4 percent to $23.2 billion from $22.7 billion.
Meanwhile, the financial account stood at a net inflow of $20.8 billion, significantly higher than the $8.2 billion net inflows recorded in January to September 2023.
This translated to a balance of payment surplus of $5.1 billion in the first nine months, higher than the $1.7 billion surplus recorded a year ago. In the third quarter alone, the country’s BOP surplus stood at $3.7 billion, a turnaround from the $0.5 billion deficit previously.
The BSP said it would release its BOP forecasts next week.