Cur­rent ac­count deficit not detri­men­tal to PH: BSP of­fi­cial

Sun.Star Pampanga - - BUSINESS! -

MANILA – The coun­try’s cur­rent ac­count (CA) deficit rose to record­high USD7.9 bil­lion in 2018 af­ter im­ports con­tinue to sur­pass ex­ports given the strong do­mes­tic de­mand.

How­ever, Di­rec­tor Re­den­tor Paolo Ale­gre Jr., of the Bangko Sen­tral ng Pilip­inas (BSP) Depart­ment of Eco­nomic Statis­tics (BES), pointed out that the deficit in the coun­try’s CA “may not nec­es­sar­ily be detri­men­tal to the coun­try”.

“This (deficit) is be­cause im­ports growth re­mains ro­bust while ex­ports of goods is lower-than-pro­jected in 2018 with tepid ex­ter­nal de­mand for Philippines ex­port goods,” he said in a brief­ing Fri­day.

Ale­gre noted the CA deficit last year ac­counted for -2.4 per­cent of gross do­mes­tic prod­uct (GDP) and was higher than the USD6.4-bil­lion deficit pro­jec­tion for 2018, which ac­counted for -1.9 per­cent of do­mes­tic out­put.

“It should be eval­u­ated based on its un­der­ly­ing fac­tors,” he said, cit­ing the trend of an in­crease in in­vest­ments than sav­ings.

This “points to high, pro­duc­tive and grow­ing econ­omy”, he added.

BSP data show that trade-in-goods deficit last year in­creased by 21.9 per­cent to USD49 bil­lion be­cause of the 9.4-per­cent rise in im­ports of goods and the 0.3-per­cent drop in ex­ports of goods.

Im­ports of goods went up to USD100.7 bil­lion from year-ago’s USD92 bil­lion, while ex­ports fell to USD51.7 bil­lion from USD51.8 bil­lion in 2017 be­cause of lower ex­ports of co­conut and mineral prod­ucts.

During the same brief­ing, BSP Deputy Gover­nor Diwa Guini­gundo said that be­fore 2018, the high­est CA deficit was recorded in 1997 at USD4.4 bil­lion.

He said the CA deficit is not re­ally an is­sue since what should be con­sid­ered is whether this can be fi­nanced.

Guini­gundo said the fi­nan­cial ac­count last year reg­is­tered USD7.8 bil­lion net in­flows, more than twice the USD2.8 bil­lion net in­flows in 2017.

Flows from other In­vest­ments, specif­i­cally loans, helped counter the ad­di­tional drop in the cur­rent ac­count, he said.

The BSP ex­ec­u­tive also noted that cap­i­tal out­flows were lower.

BSP data show that net out­flows of port­fo­lio in­vest­ments reached USD858 mil­lion last year, a de­cline of 65 per­cent than year­ago’s USD2.5 bil­lion net out­flows. “Lower fx (foreign ex­change) out­flows means res­i­dents are in­vest­ing less abroad. It used to be higher out­ward in­vest­ment in pre­vi­ous pe­ri­ods,” he added. (PNA)

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