The BoP deficit reflects the drop in dollar reserves last month, Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said in a note.
The January GIR level was down by 1.19% from the record $110.117 billion as of end-December as the government paid its debt obligation and adjustments in the central bank’s gold holdings valuation.
“It could also be attributed to the wider trade deficit in recent months amid some pick up in imports,” Mr. Ricafort said.
The trade deficit in December widened to a nine-month high of $2.18 billion from a $1.73-billion gap in November, albeit slimmer than the $2.96 billion a year earlier. This, as imports rose 4.5% to $7.9 billion in November, but still down by 9.1% from a year ago.
Mr. Ricafort said inflows from remittances and foreign investments could push the BoP to a surplus in the coming months.
Cash remittances inched down 0.8% to $29.903 billion in 2020 as the crisis continued. It is expected to grow by 4% this year on the back of expected global economic recovery.
Net inflows of foreign direct investments slumped 10.8% to $5.792 billion in the first 11 months of 2020. It is expected to reach $7.5 billion this year.
In 2020, the BoP stood at a surplus of $16.022 billion. The central bank expects the BoP surplus to narrow to $3.3 billion this year. —