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PH seen to still post BOP surplus in '20 despite pandemic

June 13, 2020 - Saturday 9:06 AM by PNA

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MANILA – Philippine monetary officials continue to see a surplus in the country’s balance of payment (BOP) position this 2020 despite the economic impact of the coronavirus disease 2019 (Covid-19) pandemic.
In a Viber message to journalists Thursday, Bangko Sentral ng Pilipinas (BSP) Governor Benjamin Diokno said that from the projected USD2.9-billion surplus set during the central bank’s assessment in November 2019, the latest forecast for this year is a USD6-million surplus while it is USD2.4-billion surplus next year.
As a percentage of domestic output, the latest BOP surplus projection for this year accounts for about 0.2 percent of gross domestic product (GDP), lower than the 0.7 percent previously.
The surplus projection for next year accounts for about 0.6 percent of domestic output.
Diokno said these projections took into account the key developments as of last April, which include the “sharp contraction in both global and domestic economic activities in 2020, followed by a strong recovery in 2021; a shift towards increased monetary policy accommodation among central banks worldwide; and continued trade and political tensions.”
As of last April, the country’s BOP position, which refers to its total transactions with the rest of the world, posted a surplus of USD1.6 billion.
This is a big improvement since the country started the year with a USD1.36-billion BOP deficit.
The surplus as of last April was driven by the USD1.67-billion surplus in the fourth month this year, a far cry from the USD448-million surplus in the previous month and the USD467-million surplus in the same period last year.
Gross international reserves (GIR) projection for this year was hiked to USD90 billion from USD86 billion previously, while next year’s assumption is USD91 billion.
As of last April, the country’s total foreign reserves amounted to record-high USD90.94 billion, which is enough to cover eight months’ worth of imports of goods and services and payments of primary income.
This imports and primary income cover is way higher than the international standards of three-month cover.
Current account (CA) is seen to post a deficit of 0.5 percent GDP this year, from 2.1-percent deficit projection last November. It is seen to post a 4.4-percent deficit next year.
Exports of goods are expected to contract by 4 percent this year from a 4-percent rise earlier, but it is expected to grow by 5-percent next year.
Imports of growth is projected to post a -5.5-percent print this year from an 8-percent growth projection last November. Next year, it is seen to grow by 8 percent.
Cash remittances are expected to reach USD28.6 billion this year, lower than the USD30.7-billion projection last November. This is due to the large number of overseas Filipino workers (OFWs) who lost their jobs and have been repatriated.
In terms of growth, cash remittance is seen to contract by 5 percent this year from a projection of 3-percent growth earlier. Next year, it is seen to expand by 4 percent.
It is seen to increase to USD329.8 billion next year.
Receipts from the business process outsourcing (BPO) sector is seen to register lower growth of 2 percent this year from 5 percent earlier. The projection for next year is a growth of 4 percent. (PNA)