The Bangko Sentral ng Pilipinas said that the country’s latest balance of payments assessment for 2021 factored in pockets of optimism amid encouraging economic outturns in recent months on the one hand and the continued high uncertainty from pandemic-related challenges on the other hand.
“Global economic recovery is seen to remain broadly on track, while at the domestic front, there are indications that the spread of the highly transmissible COVID-19 Delta variant has been contained,” Benjamin Diokno, BSP Governor, said.
However, Diokno said growth prospects of some advanced economies were significantly downgraded.
“Moreover, there were spikes in COVID-19 cases recorded in some Euro areas as well as the recent emergence of the Omicron variant. These warrant continued vigilance of the Philippines’ major trade and investment partners. In addition, the government’s promotion of a more proactive approach in the management of COVID-19 related risks together with the shift from a pandemic to an endemic paradigm will help manage these concerns,” Diokno said.
For 2022, BSP said the continued growth in advanced economies bodes well for Philippine trade and investments.
“This could also lend support to robust BPO revenues and overseas Filipinos (OF) remittances as businesses are likely to outsource or hire more overseas workers to fill in their manpower needs,” Diokno said.
The central bank stressed that the wider global distribution and administration of vaccines coupled with anticipated improvements in immunity and available COVID-19 treatments by next year are also likely to help revitalize international travel and tourism-related services.
“Nonetheless, the latest 2022 forecasts remain mindful of the continued vulnerability of global and domestic economic recovery given the uncertainty of the direction and duration of the pandemic,” Diokno said.
In view of the foregoing, the latest estimated 2021 BOP surplus is revised to a lower surplus of $1.6 billion, 0.4 percent of GDP, from $4.1 billion or 1.1 percent of GDP in the September 2021 projection exercise.
Diokno explained the narrower BOP surplus reflects the projected reversal of the current account into a deficit in 2021 of $4.0 billion from a surplus $3.5 billion in the previous projection “arising from the foreseen further widening of the trade-in-goods deficit.”
This, in turn, results from the projected expansion of goods exports by 16.0 percent from previous forecast of 14.0 percent combined with an even stronger acceleration of goods imports by 30.0 percent from 20.0 percent.
Growth forecasts for both services exports and imports are expected to each register a positive outturn of 2.0 percent from -2.0 percent and -4.0 percent, respectively.
The 2021 projection for OF cash remittances is retained at 6.0 percent, consistent with the sustained recovery of OF remittances as it grew by 5.6 percent year-on-year in the first nine months of 2021.
Lending support to the outlook are expectations of rising demand for foreign workers as the global economy recovers; increasing use of online remittance facilities; and lingering altruistic motives by Filipinos abroad.
For 2022, the overall BOP position is projected to remain in surplus but at a more modest level of $0.7 billion from $1.7 billion in the previous forecast.
The revised forecast is mainly on the back of the projected higher current account deficit of $9.9 billion, driven mainly by the further widening of the trade-in-goods deficit as growth in goods imports is assumed to continue to outpace exports.
Meanwhile, the growth forecast for services exports in 2022 was kept unchanged at 5.0 percent while services imports growth was revised upward to 10.0 percent from 8.0 percent.
