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The central bank expects a larger balance of payments (BoP) surplus in 2020 after taking into account the latest government data, as well as emerging economic developments and prospects.
In a virtual briefing on Friday, Zeno Ronald Abenoja, officer in charge of the Monetary Policy Subsector of Bangko Sentral ng Pilipinas (BSP), said that the surplus was now projected at $ 12.8 billion this year, equivalent to 3.4 percent of the gross domestic product of the country. (GDP).
“This largely reflects the general balance of payments position of $ 10.3 billion in the first 10 months of the year, supported by higher external loans from the national government, as well as [a] lower merchandise trade deficit; and inflows of foreign direct investment (FDI) [and] Philippine remittances (OF) abroad, as well as trade in services ”, he explained.
The current account, a major component of the balance of payments, is estimated to register a surplus of $ 8.4 billion this year, equivalent to 2.3 percent of GDP, and higher than the $ 6 billion previously estimated.
“In particular, [exports of goods] they are expected to decline by 14 percent in 2020, slightly improving from the previously projected 16 percent contraction, “said Abenoja, adding that” this is due to better external demand during the third quarter. “
Goods imports are estimated to decline by 21.5 percent, dragged down by the fall in world oil prices and the tepid recovery in domestic economic activity.
Service exports are forecast to fall by 21.4 percent due to the steeper anticipated drop in travel revenue, as the tourism industry continues to recover from the coronavirus pandemic and slower growth in the travel industry. IT business process outsourcing after it generated lower-than-expected revenue in the first half.
“Meanwhile, the projected contraction in OF cash remittances remains at 2 percent, even as real remittances for the year to date improved with a smaller contraction of 1.4 percent as of September 2020,” Abenoja said.
The financial account is projected to register a net inflow of $ 3 billion, based on programmed and projected external borrowing that the public and private sectors can take advantage of, as well as the upward revision of expected inflows of FDI and foreign portfolio investments .
According to the BSP official, this year’s gross international reserves could reach $ 105 billion, equivalent to 11.6 months of import coverage, after taking into account revaluation adjustments and the increase in external government loans. in response to the pandemic, as well as to finance the recovery. supporting infrastructure.
By 2021, the BSP forecasts that the balance of payments surplus will shrink to $ 3.3 billion, or 0.8 percent of GDP.
“This considers the lowest current account surplus expected next year amid the anticipated widening of the goods trade deficit as imports expand amid better prospects for domestic demand and as the government catches up with its important infrastructure program, ”said Abenoja.
The current account surplus is projected to contract to $ 6.1 billion, or 1.5 percent of GDP, in 2021.
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