By Chino S. Leyco
The Philippines’ current account deficit declined in the first nine-months of the year boosting the overall surplus in the services trade and income balances, the Department of Finance (DOF) said.
In his latest economic bulletin, Finance Undersecretary Gil S. Beltran said the current account gap dropped to 0.42 percent of the economy, as measured by gross domestic product (GDP), in January to September this year from 2.46 percent in the same period last year.
Beltran said the current account, one of the main components of the balance of payments, strengthened during the period due to lower deficit in the trade in goods, which fell below 16 percent of GDP at end-September.
“The current account [also] gained strength even as the country’s economic growth recovered to 6.2 percent in the third-quarter,” Beltran said.
The current account gauges the balance of exports and imports of goods, services as well as income balances. In the quarter ending September, the country’s deficit in the trade in goods balance decreased from 15.49 percent of GDP to 13.78 percent after imports slowed down due to lower capital goods purchases. Likewise, the surplus in the trade in services and income balances rose to 13.4 percent from 13 percent in year ago.
“Earnings from BPOs [business process outsourcing] remittances inflows and earnings from investments abroad by Filipino citizens accounted for these substantial receipts,” Beltran said in his report submitted to Finance Secretary Carlos G. Dominguez III.
Primary income balance, which is accounted for by earnings by the country from placements abroad less earnings by other countries from local placement, grew by 52.8 percent to $3.79 billion from $2.48 billion a year before.
On the other hand, secondary income balance which is accounted for by remittances accruing to overseas Filipinos less incomes of expatriates remitted abroad also grew by 2.7 percent from $19.74 billion to $20.27 billion.
“Maintaining good fundamentals by keeping both the budget deficit and balance-of-payments manageable, keeping interest rates at the level that sustains the volume of investments and allowing the exchange rate to maintain its competitive level will allow the country to sustain economic growth in the medium-term,” Beltran said.