THE country’s dollar transactions with the rest of the world turned to surplus in the first 10 months of the year, after a strong performance in October this year, the Bangko Sentral ng Pilipinas (BSP) reported.
The country’s overall balance of payments (BOP) position—the data summary of all the country’s transactions with the rest of the world—hit a position of $476-million surplus in January to October this year.
The BOP is usually considered an important economic indicator in an economy as it shows the level of earnings or expenses of the Philippines with its transactions with the world.
A deficit means that the country had more dollar expenditures than its dollar earnings during the period.
The country’s year-to-date BOP has been in deficit in the first nine months of the year due to the heavy deficits in February and March to the tune of around $2 billion.
October’s strong BOP surplus, which hit $1.14 billion, reflected inflows arising mainly from the national government’s (NG) net foreign currency deposits with the BSP and the BSP’s income from its investments abroad, the Central Bank said in a statement.
The October BOP surplus was a reversal of the $412-million deficit in September this year. It is, however, lower than the $3.4-billion surplus in October 2020.
In September, the 2021 BOP projection was revised downward from a surplus of $7.1 billion to $4.1 billion for this year on a “more guarded view” of economic recovery. The 2022 BOP projection has also been lowered from $2.7 billion to a $1.7-billion surplus.
This means that the country should incur more than $1.8 billion in surplus in the last two months of the year to reach the BSP’s projection.
Rizal Commercial Banking Corp. (RCBC) Chief Economist Michael Ricafort said the country’s BOP is expected to further improve in the remaining months of the year.
“BOP data could still improve in view of the seasonal increase in OFW remittances and conversion to pesos in preparation for the Christmas season in the latter part of the year and the increase in various corporate fund-raising activities banking transactions in the pipeline, especially from November-December 2021 before the Christmas holiday break,” Ricafort said.
“Massive vaccination vs. Covid-19 locally and in some developed countries around the world towards herd immunity would fundamentally support improvements in economic recovery prospects, and thereby would, in turn, support increased structural US dollar inflows into the country such as OFW remittances, BPO revenues, foreign investments, some pick-up in foreign tourism receipts and POGO revenues eventually if fully vaccinated people would eventually be allowed to travel,” he added.