The Bangko Sentral ng Pilipinas (BSP) revised its balance of payments (BoP) projections amid the expected recovery in the local and global economies next year, a smaller trade deficit, the resilience of Overseas Filipino (OF) remittances and foreign direct investments (FDIs), and the build-up in gross international reserves (GIR).
In its revised forecasts, BSP sees the overall BOP position to post a surplus of $8.1 billion or 2.2 percent of GDP, up from $0.6 billion or 0.2 percent of GDP, in 2020 and $3.4 billion or 0.9 percent of GDP in 2021.
Benjamin Diokno, BSP Governor, said the new set of forecasts takes into account “the macroeconomic impact of the COVID-19 pandemic, as well as the latest global and domestic economic developments.”
“The revised forecast supersedes the BOP projections approved by the Monetary Board last June 11,” Diokno said.
The latest BOP projections considered improved global activity due to reopening of economies.
In its October 2020 World Economic Outlook (WEO), the International Monetary Fund projects global growth to decline by 4.4 percent in 2020.
This is 0.8 percentage point above the June 2020 WEO Update forecast.
Diokno said the revision was hinged mainly on the better-than-anticipated gross domestic product outturns recorded during the second quarter of 2020 mostly for advanced economies, amid easing of lockdown measures.
“Moreover, both the global and domestic economies are projected to post a recovery in 2021 of 5.2 percent and 6.5 to 7.5 percent, respectively,” Diokno said.
BSP’s revised BoP outlook also took note of the narrower-than-anticipated trade-in-goods deficit.
Diokno said this was driven by the foreseen broad-based contraction in both goods exports and goods imports, “with the latter declining at a faster rate due to weaker domestic demand.”
Diokno also noted OF remittances posted a strong rebound in June and July this year as host economies started to reopen.
“This led to a lower contraction of 2.6 percent for January to August 2020,” Diokno said.
FDIs, on the other hand, continued to post growth for the third consecutive month in July 2020.
Moreover, latest preliminary data show that the country’s GIR as of end-September 2020 is now above $100 billion.
