Current account reverts to surplus in 1st quarter

Published June 21, 2020, 12:00 AM

by manilabulletin_admin

By Lee C. Chipongian

The country’s current account was in surplus of $92 million as of end-March, reversing the $1.7 billion deficit same time in 2019, based on a Bangko Sentral ng Pilipinas (BSP) report.

The surplus was due to the lower trade in goods account deficit in the first quarter, as well as the higher net receipts in the secondary income account “which were mitigated partly by the decline in net receipts of trade in services and primary income.”

The BSP recently revised the 2020 current account deficit projection lower from $8.4 billion previous estimate (November 2019, before the pandemic) to $1.9 billion, or now -0.5 percent of GDP from the previous forecast of -2.1 percent of GDP.

The lower current account projection is primarily on account of the projected narrower trade-in-goods deficit given anticipated contractions in both exports ( 4 percent) and imports (-5.5 percent) alongside lower expected receipts from trade-in-services, said the BSP.

After considering the impact of COVID-19, the central bank’s 2020 balance of payments projection was also lowered to a $600 million surplus from the previous $2.9 billion surplus. “This is based on the anticipated lower overall foreign exchange inflows from both the current and financial accounts,” said the BSP.

While the external outlook remains clouded by uncertainty over the full extent of the COVID-19 impact, the BSP expects a gradual rebound in economic activity at home and overseas as public health measures in affected economies and government stimulus programs take effect in many countries,” it added.