BSP sees lower BOP surplus in 2024

MANILA, Philippines — The country’s 2024 balance of payments (BOP) surplus is expected to decline compared to a year ago amid slower economic growth and persistent geopolitical tensions, according to the Bangko Sentral ng Pilipinas.

The BSP said the Philippines is expected to post a BOP surplus of $3.5 billion or 0.8 percent of gross domestic product in 2024, slightly lower than the surplus of $3.7 billion or 0.8 percent of GDP in 2023.

However, the revised forecast for 2024 is higher than the original target of $2.3 billion surplus in September. 

The central bank attributed the lower forecast to stable yet moderating global and domestic economic growth prospects, slower inflation, lingering geopolitical and weather shocks as well as possible shifts in US trade and investment policies under the Trump administration. 

The BOP is the difference in total values between payments into and out of the country over a period.

A surplus indicates that more dollars flowed into the country from exports, remittances from overseas Filipino workers, business process outsourcing earnings, and tourism receipts than what flowed out to pay for the importation of goods, services and capital.

Latest data showed that the country’s BOP surplus stood at $2.12 billion from January to November last year, 30 percent lower than the $3.03-billion excess recorded in the same period a year ago.

The central bank also expects the country’s current account shortfall to narrow to $10.4 billion or 2.2 percent of GDP in 2024 from $11.8 billion or 2.7 percent of GDP in 2023.

However, this is wider than the earlier forecast of a $6.8 billion deficit given in September. 

Monetary authorities project goods exports and imports to rise by two percent in 2024. Services exports may also jump by eight percent while services imports are expected to grow by 19 percent. 

“The latest growth forecast for services exports is anchored on the expected

deceleration of revenue inflows coming from BPO and travel activities, consistent with the latest trend driven in part by domestic constraints in AI adoption and slow return of Chinese tourists into the country, among others,” the BSP said. 

For 2024, the BSP expects travel receipts to grow by 15 percent, lower than the 40 percent growth rate the central bank gave a quarter ago. The projected increase in BPO revenues has also been revised to a slower pace of five percent from the original target of six  percent. 

The BSP also sees a higher hot money net inflow of $6.3 billion instead of the previously projected $4.2 billion. Meanwhile, the target for foreign direct investment inflow was reduced to $9 billion from $10 billion.

For 2025, the BSP has raised its BOP surplus projection to $2.1 billion or 0.4 percent of GDP from $1.7 billion or 0.3 percent of GDP, while its forecast for the country’s current accout deficit stood at $12.1 billion or 2.4 percent of GDP from $5.5 billion or 1.1 percent of GDP.

“Sustained net inflows from the financial account will continue to buoy the overall BOP outlook this year,” the BSP said. “There is still scope for global trade to pick up in 2025 given an environment of moderating global inflation and improved business activity,”the BSP said.

“Nevertheless, US-related uncertainty, specifically linked to possible policy shifts in the US trade, investment and migration policies, will remain a key downside risk to the 2025 external sector outlook,” it added.