The current account reverts to a surplus of $ 4.4 billion

The country’s current account surplus improved to $ 4.4 billion in the first six months of the year, reversing the $ 2.6 billion deficit reported in the same period of 2019, the Bangko Sentral ng Pilipinas (BSP) said on Friday.

BSP Deputy Governor Francisco G. Dakila Jr. said the better-than-expected current account surplus in the first half of 2020 bodes well for the overall balance of payments (BOP) outlook for the year.

In May, the BSP revised down the balance of payments projection from a $ 2.9 billion surplus to a $ 600 million surplus due to the impact of the COVID-19 pandemic. It also lowered the 2020 current account deficit projection from the previous estimate of $ 8.4 billion (November 2019, before the pandemic) to $ 1.9 billion, or now -0.5 percent of GDP from the previous forecast of – 2.1 percent of GDP.

The BSP, in its regular quarterly review of the balance of payments, said that the current account surplus was higher due to the decrease in the trade deficit in goods to $ 15.7 billion from $ 24.4 billion, which “more than compensates the lower net income recorded in services trade of $ 5.2 billion (from $ 5.9 billion), primary income of $ 2.1 billion (from $ 2.5 billion) and secondary income of $ 12, 8 billion (out of $ 13.3 billion), ”he explained.

For the second quarter, the current account surplus of $ 4.4 billion also reversed the deficit of $ 931 million in the same period last year, mainly due to the lower goods trade deficit of $ 5.4 billion in the second quarter of this year, from $ 12.1 billion in 2019. also offset the decline in net service trade revenue of $ 2.7 billion from $ 3.3 billion, primary revenue of $ 1 billion from $ 1.2 billion, and secondary revenue of $ 6.1 billion out of $ 6.7 billion, said the BSP.

The total balance of payments had a surplus of $ 4.2 billion in the second quarter, more than the $ 991 million at the same time in 2019.

“The position of the balance of payments increased significantly due to the reversal of the current account to a surplus, after a substantial reduction in the trade deficit in goods. The slow performance of both imports and exports of goods reflected the adverse impact of the COVID-19 pandemic, including disruptions in global demand and supply chains, ”said the BSP.

The balance of payments is made up of the current account, the financial account, and the capital account.

The BSP said that the financial account, which is the portfolio’s funds or investments, “was reversed in net outflows mainly due to the change in trend from portfolio investments to net outflows. This, however, was offset by the decrease in net outflows of other investments and the increase in net inflows of direct investments ”.

The financial account for the second quarter recorded net outflows of $ 152 million, lower than the net inflow of $ 278 million in the same quarter last year. Portfolio investments were affected by concerns from the COVID-19 pandemic.

The BSP reported that the financial account had net outflows of $ 3.9 billion in the first six months of the year, a change from net inflows of $ 5.5 billion in January to June 2019.

Meanwhile, net income in the capital account decreased to $ 8 million during the quarter compared to $ 22 million previously. The BSP explained this as the “combined effect of net payments on the gross acquisition of non-financial non-produced assets of $ 8 million (of $ 1 million) and lower income from other capital transfers to the National Government amounting to $ 16 million of $ 20 million “.

The capital account also posted lower net income of $ 16 million in the first six months versus $ 47 million at the same time in 2019.