BOP deficit widens to $994 M in Q1

The country incurred a balance of payments (BOP) shortfall of $994 million as of the end of the first quarter, higher compared to the same time last year of $210 million.

Data from the Bangko Sentral ng Pilipinas (BSP) show a deficit of $550 million for the month of March, more than the deficit recorded in February of $436 million and $9 million in January.

BSP officials forecast the 2017 BOP balance to return to a surplus position this year of $1 billion despite the first quarter results. The forecast will reverse last year’s $420-million deficit.

Last month the BSP reported that current account surplus decreased by 91.7 percent in 2016 to $601 million from $7.3 billion in 2015.

The BOP – a summary of the country’s transactions with other countries – are largely affected by fund flows such as investments and actual money transmissions. These flows are in the financial account which includes direct investments, portfolio investments, and other forms of investment. The current account, a big part of the BOP, covers trade in goods, services, primary income, and secondary income while the capital account are capital transfers.

The BSP in a report earlier said the BOP deficit in 2016 was due to the decline in the current account surplus “as a result mainly of the increase in trade-in-goods deficit which more than offset the upturn in net receipts of secondary income, trade-in-services and primary income.”

For 2017, the BSP forecasts a current account surplus of $800 million.