Improving BOP position noted

MANILA -- An economist of ING Bank on Tuesday cited the improvement of the Philippines balance of payment (BOP) position so far this year, tracing this to investors’ positive sentiments.

Citing data released by the Bangko Sentral ng Pilipinas, ING Bank N.V. Manila Branch senior economist Nicholas Mapa said the country registered a USD163-million BOP surplus last October, a jump

from month-ago’s USD38-million surplus and a reversal from the USD458-million deficit in the same period last year.

To date, the country’s BOP surplus amounts to USD5.73 billion, a turn-around from yearago’s USD5.59-billion deficit.

Mapa attributed the surplus to net portfolio investment inflows last October, which the central bank reported to have reached USD105 million.

He cited the BOP surpluses in nine of the 10 months so far this year, with the deficit posted last June at USD404 million.

Mapa added the financial inflows helped “offset sustained bleeding stemming from a trade deficit.”

But he said although the trade gap narrowed from 2018, the current account balance is expected to remain in the red for the balance of 2019.

“A sharp reversal in risk sentiment and inflation outlook have helped bolster the Philippines as a destination for investment flows, which is all the more impressive given the fact that direct investments (FDI) have been contracting,” he said.

Mapa said financial market turmoil has been kept at a minimum given improved communication from central bank officials despite successive rounds of easing now that inflation is under control.

The economist, meanwhile, forecast deficits in the country’s BOP position in 2020, similar to the 2018 situation since the Federal Reserve is “expected to be neutral next year and with the (Philippine) government gearing up for a double headed fiscal stimulus.”

“These developments could lead to a renewed widening of the trade deficit (as imports bloat) to exert pressure on the BoP while financial flows may enjoy the same velocity in 2020 with BSP expected to cut policy rates to support the growth objective,” he added. (PNA)