The Bangko Sentral ng Pilipinas (BSP) said Friday the country’s balance of payments (BOP) surplus is expected to post a bigger surplus for both 2024 and 2025.
The BOP summarizes a country’s economic transactions with the rest of the world for a specific period.
The overall position can be in surplus, deficit or balance.
In a statement, the BSP said the BOP is expected to register a surplus of USD3.5 billion in 2024, higher than the USD2.3 billion earlier forecast.
For 2025, the BSP also revised upward the BOP surplus to USD2.1 billion from USD1.7 billion.
“The latest set of forecasts points to continued resilience of the country’s overall BOP position for 2024 and 2025, while showing a decelerating path relative to the 2023 outturn,” the central bank said.
“This assessment is underpinned mainly by stable yet moderating global and domestic economic growth prospects; a slowing inflation trajectory across jurisdictions; lingering geopolitical and weather shocks; as well as possible shifts in US trade and investment policies under the incoming Trump administration,” it added.
The BSP expects the current account shortfall to widen to USD10.4 billion in 2024 from the earlier projection of USD6.8 billion.
“This is largely a result of the lower growth forecasts for both goods and services exports in 2024 alongside higher projected services imports,” the BSP said.
Goods exports growth was lowered to 2 percent from the earlier 4 percent while the forecast for services exports was also slashed to 8 percent from 13 percent.
The growth projection for services imports however was revised upward to 19 percent from 13 percent.
“The latest growth forecast for services exports is anchored on the expected deceleration of revenue inflows coming from business process outsourcing (BPO) and travel activities, consistent with latest trend driven in part by domestic constraints in AI (artificial intelligence) adoption and slow return of Chinese tourists into the country, among others,” the BSP said.
The BSP said merchandise exports will likely deliver a more subdued performance in 2024 due to decline in exports of semiconductor products, copper metal, and bananas.
“Expectations of softer global demand amid tight monetary conditions, post-pandemic fiscal consolidation, as well as larger trade barriers and increased uncertainty from President-elect Trump’s announced policies also continue to weigh down the near-term prospects for goods exports,” it said.
Travel receipts will likely grow by 15 percent in 2024, while BPO revenues growth is projected to expand by 5 percent.
The projected cash remittances growth was retained at 3 percent.
The BSP also projects a higher net inflow of hot money to USD6.3 billion from USD4.2 billion, while the foreign direct investment (FDI) net inflow projection was revised downward to USD9.0 billion from USD10 billion.
For 2025, the BSP said the overall BOP is anticipated to remain in a surplus despite the projected widening of the current account to USD2.4 billion.
“Sustained net inflows from the financial account will continue to buoy the overall BOP outlook this year. There is still scope for global trade to pick up in 2025 given an environment of moderating global inflation and improved business activity,” the BSP said.
“Nevertheless, US-related uncertainty, specifically linked to possible policy shifts in the US trade, investment, and migration policies, will remain a key downside risk to the 2025 external sector outlook,” it added.
Goods exports will likely grow by 4 percent this year, lower than the earlier 6 percent projection while the forecast for goods imports growth was retained at 5 percent.
The projected growth for services exports was likewise retained at 10 percent while the projection for services imports growth was revised to 8 percent from 6 percent.
Travel receipts is projected to grow at a faster pace of 20 percent this year, while BPO revenues will likely increase by 6 percent.
Cash remittances, meanwhile, is projected to go up by 3 percent.
Net inflows of the FDI and hot money are forecast to reach USD10 billion and USD3.1 billion this year.
The BSP said given the prospects of continued foreign exchange inflows into the economy, further buildup is expected in the gross international reserves (GIR) for 2024-2025.
The BSP projected the GIR to reach USD109 billion in 2024 and USD110 billion this year, higher than the previous estimate of USD106 billion and USD107 billion, respectively. (PNA)
