THE Philippines is expected to continue posting a Balance of Payment (BOP) surplus until next year due to the growth of global demand and the domestic economy, according to the Bangko Sentral ng Pilipinas (BSP).
Based on its third quarter projections, the BSP said the country’s BOP surplus may reach $2.3 billion in 2024 and $1.7 billion in 2025.
Both estimates are higher compared to its second quarter estimates which projected full-year BOP to reach $1.6 billion in 2024 and $1.5 billion in 2025.
“The latest set of forecasts indicate an improvement in the overall BOP position for 2024 and 2025 relative to the June 2024 projection exercise,” BSP said in a statement.
“This development is underpinned mainly by the sustained positive global and domestic economic growth prospects, decelerating inflation, as well as the pickup in world trade activity,” it added.
Based on the latest forecast, the country’s Gross International Reserves (GIR) could end the year at around $106 billion in 2024 and $107 billion in 2025.
These estimates are both higher compared to the projections made in the second quarter at $104 billion in 2024 and $105 billion in 2025.
However, the projections indicated that the country’s current account deficit is expected to widen to $6.8 billion in 2024 and $5.5 billion in 2025.
These deficits are also wider compared to the current account deficit outlook made in the second quarter, at $4.7 billion in 2024 and $2 billion in 2025.
BSP said merchandise exports are expected to slow due to the semiconductor industry which “does not appear to be benefiting from the AI (artificial intelligence)-induced upturn in global electronics demand.”
“The wider current account deficit in 2024 was due to the reduction in the growth forecasts for goods and services exports,” BSP said.
“Nonetheless, the current account outlook continues to be supported by robust growth prospects for travel receipts, along with the steady inflows of overseas Filipinos (OFs) remittances,” it added.
Meanwhile, risks to the country’s BOP outlook include price volatility caused by geopolitical and trade tensions, as well as extreme weather events and mobility risks posed by infectious diseases like monkeypox.
In terms of 2025, BSP said downside risks include potential market instability from escalations in geopolitical and geoeconomic risks which include the brewing conflict in the Middle East and US-China trade tensions.
In August, BSP data showed the country posted a BOP surplus of $88 million in August 2024, or 254.39 percent higher than the $57-billion BOP deficit posted in August 2023. The figure in August was also 41.94 percent higher than the $62-million surplus posted in July 2024.
BSP said the BOP surplus in August 2024 brought the year-to-date BOP level to a $1.6-billion surplus, lower than the $2.1-billion surplus recorded in January-August 2023.
The Central Bank also noted that based on the preliminary data from the Philippine Statistics Authority’s (PSA) International Merchandise Trade Statistics (IMTS), the trade deficit for January-July 2024 reached $29.9 billion, down from the $31.8-billion deficit posted in January-July 2023.
