BOP posts P2-B surplus in 2014

The country’s balance of payments (BOP) position is now estimated to reach a surplus of $2 billion by year-end, a reversal of the $2.879-billion deficit last year, the Bangko Sentral ng Pilipinas (BSP) said.

BSP Deputy Governor Diwa C. Guinigundo said the upward adjustment of the BOP forecast from $1 billion was on the back of lower oil prices, higher direct and portfolio investments, sustained strong inflows from Filipinos abroad, and continued double-digit growth of the business process outsourcing and tourism industries.

“The BOP projections considered recent trends in the global economy… such as the generally lower global growth outlook…, the sharp fall in oil prices…, and the more volatile global financial markets given the strengthening US dollar, divergence in monetary policies among major economies, oil market uncertainty, and elevated geopolitical risks,” Guinigundo said.

The current account component of the BOP should amount to a surplus of $14.2 billion this year, the highest sum recorded since 2005, Guinigundo said. This has also

been revised upward from an October projection of $6.8 billion.

Travel receipts should continue growing in doubledigits this year amid the government’s aggressive promotion of tourist spots, improvement in accessibility and connectivity, and also increased flights to the country, Zeno Ronald R. Abenoja, Director for BSP’s Department of Economic Research said in the same briefing.

IT-BPO revenues, meanwhile, should remain as the primary contributor in the services account under the BOP on continued growth of the industry, he added.

Remittances should climb by five percent over yearago levels due to the steady deployment of skilled Filipino workers abroad and also expansion in banks’ remittance services, Abenoja said.

The BSP also hiked its forecast for foreign direct investments this year to $6 billion from an earlier estimate of $5.3 billion. The new figure, however, is below the $6.2 billion seen in 2014.

Abenoja said the rosy prospects of the economy and improvement in global conditions should continue attracting FDIs this year. The central bank sees these investments mainly going into manufacturing, real estate, and entertainment activities.

Foreign portfolio investments, meanwhile, are seen improving to $1.4 billion this year from an earlier forecast of $1.3 billion. The country last year saw a net outflow in portfolio investments of $310.21 million on heightened volatility in global financial markets.

The Philippines should see increased hot money inflows this year, Abenoja said, as loose monetary policy in Japan and Europe should offset the impact of the US Federal Reserve’s expected hike in interest rates. Central banks in Japan and the euro area have been easing policy measures to fight deflation and pump money in their respective economies.

At the same time, gross international reserves are expected to end the year at $81.6 billion, lower than the previous projection of $83 billion. The new sum, however, is still above the $79.5 billion level recorded in 2014.