BSP sees big balance of payments deficit of $6.3b this year

THE Bangko Sentral ng Pilipinas said Friday it expects the country’s balance of payments position to post a larger deficit of $6.3 billion this year amid the buildup of external risks, including the aggressive monetary policy normalization in advanced economies, the slowdown in China, the war between Russia and Ukraine and the lingering COVID-19 pandemic.

It said in an online briefing the revised projection of $6.3-billion BOP deficit equivalent to -1.5 percent of GDP this year would be larger than the initial estimate of a $4.3-billion shortfall (-1.0 percent of GDP).

The BSP made the revision following the downgraded global growth outlook with the escalation of the Ukraine-Russia conflict and its international ramifications, such as the increase in food and fuel prices.

“The anticipated slowdown of China’s economy could also put pressure on trade prospects. Meanwhile, capital flows could be particularly volatile following the abrupt monetary policy normalization in the US and in other major economies,” said BSP Department of Economic Research managing director Zeno Ronald Abenoja.

Abenoja said the widening of the current account deficit to $19.1 billion (-4.6 percent of GDP) from the earlier projection of $16.3 Manila billion (-3.8 percent of GDP)Swtoaulnd dard contribute to the larger BOP deficit.

“This development is reflective of the foreseen sustained acceleration of goods imports by 18 percent driven mainly by the surge in international commodity prices alongside continued recovery of the domestic economy, while goods exports growth is forecasted to moderate to 7 percent due to lingering supply constraints, high input costs, and prospects of weaker global demand,” Abenoja said.Julito