9-MO BOP SURPLUS HITS $6.878B AMID PANDEMIC
THE country’s transactions with the rest of the world in the first nine months of 2020 surpassed last year’s dollar surplus despite the economic disruptions brought by the global pandemic.
The Bangko Sentral ng Pilipinas (BSP) reported on Monday that the Philippines’s balance of payments (BOP)—OR the summary of the country’s overall transactions with the rest of the world—yielded a $6.878-billion surplus as of endSeptember this year. The BOP is usually considered as an important economic indicator in an economy as it shows the level of earnings or expenses of the Philippines with its transactions with the world. A surplus means that the country made more dollar earnings than its expenses during the period.
The $6.878- billion BOP surplus came as the country clocked in a $2.104- billion surplus in September alone. This is the second largest monthly BOP surplus for the country this year, next to May’s $2.431 billion.
“Based on preliminary data, the current BOP surplus was supported mainly by higher net foreign borrowings by the national government and lower merchandise trade deficit along with sustained net inflows from foreign direct investments, personal remittances and trade in services,” the BSP said.
“The BOP surplus in September 2020 reflected mainly the inflows from the BSP’S foreign exchange operations and income from its investments abroad, and the national government’s foreign currency deposits with the BSP. These inflows were partly offset, however, by the national government’s payments of its foreign currency debt obligations,” it added.
Earlier this month, the BSP revised its BOP forecast for this year to take into consideration the “resilience of overseas Filipino remittances and foreign direct investments, and the build-up in gross international reserves (GIR).”
In its revised forecasts, BSP sees the overall BOP position to post a surplus of $8.1 billion (2.2 percent of GDP), up from $600 million (0.2 percent of GDP) as earlier projected for 2020 and $3.4 billion (0.9 percent of GDP) in 2021.
“The new set of forecasts takes into account the macroeconomic impact of the Covid-19 pandemic, as well as the latest global and domestic economic developments,” BSP Governor Benjamin Diokno earlier said. “The revised forecast supersedes the BOP projections approved by the Monetary Board last June 11.”
The latest BOP projections also considered improved global activity due to the reopening of economies.
Remittances posted a strong rebound in June and July this year as host economies started to reopen. This led to a lower contraction of 2.6 percent for January to August 2020. FDIS, on the other hand, continued to post growth for the third consecutive month in July 2020. BSP data show that the country’s GIR as of end-september 2020 surged above $100 billion.