BSP sees better external sector prospects

MANILA, Philippines — The Bangko Sentral ng Pilipinas (BSP) sees better external sector prospects for the next two years as it projects a higher balance of payments (BOP) surplus and a narrower current account (CA) deficit.

In an online press briefing, Sittie Hannisha Butocan, director of the BSP’s Department of Economic Research, said the Monetary Board raised the country’s BOP surplus forecast to $1.6 billion (0.3 percent of gross domestic product) for this year from the original target of $700 million (0.1 percent of GDP).

For next year, Butocan said the projected BOP surplus now stands at $1.5 billion (0.3 percent of GDP), a turnaround from the $500-million deficit (-0.1 percent of GDP) previously given in the first quarter.

The change in BOP forecasts for 2024 and 2025 was mainly due to the narrower current account balance for the next two years, she said.

The BSP lowered its current account deficit target for 2024 to $4.7 billion (-1 percent of GDP) from the previous forecast of $6.1 billion (-1.3 percent of GDP) and to $2 billion (-0.4 percent of GDP) for 2025 from the original target of $5.8 billion (-1.1 percent of GDP).

The BOP is the difference in total values between payments into and out of the country over a period.

A surplus means more dollars flowed into the country from exports, remittances from overseas Filipino workers (OFW), business process outsourcing (BPO) earnings and tourism receipts than what flowed out to pay for the importation of more goods, services and capital.

“The emerging external outlook for 2024 and 2025 is characterized by expectations of steady improvement in global economic activity, coupled by resilient domestic demand for 2024 and 2025, supported in part by easing inflation and a strong rebound in exports,” Butocan said.

She said global economic activity may pick up at a slightly faster pace this year mainly due to the upward adjustment in the growth forecast for advanced economies. This is attributed largely to the stronger-than-anticipated US GDP outturn in the fourth quarter of 2023.

“Overall, the latest global economic landscape continues to stand on firm ground as the emerging risks to the outlook over the next two