The Bangko Sentral ng Pilipinas (BSP) has updated its latest balance of payments (BOP) projection higher to a $6.2 billion surplus this year versus its previous $3.3 billion estimate announced last December.
The country’s gross international reserves (GIR) is expected to climb by as much as $114 billion by end-2021 and $117 billion by 2022, according to BSP forecasts as of the first quarter, as approved by the Monetary Board. The GIR is currently at $109 billion as of end-February.
BSP Governor Benjamin E. Diokno said the country’s external position is “looking up” as both exports and imports growth are improving.
The revised $6.2 billion BOP surplus is equivalent to 1.6 percent of GDP. For 2022, the BSP sees the BOP to remain in excess of $3.8 billion or 0.9 percent of GDP.
The BOP components such as the current account is expected to be in surplus of $9.1 billion this year and $5.2 billion in 2022, with a GDP ratio of 2.3 percent and 1.2 percent, respectively. Back in December, the current account surplus forecast was $6.1 billion for 2021.
The current account surplus is due in part to the estimated narrower trade-in-goods deficit. For this year, the BSP expects exports to grow by eight percent and imports to expand by 12 percent as the economy is reopened with the easing of lockdown restrictions. The previous projections (December 2020) was that exports will increase by five percent and imports by eight percent.
For 2022, the BSP said exports will likely grow by six percent while imports will rise by 10 percent.
The BSP retained its December services exports projection of six percent for 2021 and also extended it 2022, while services imports is estimated to grow by seven percent this year and eight percent in 2022.
The BSP said business process outsourcing receipts will stay level at four percent for both 2021 and 2022 while travel receipts — earlier projected to recover by 12 percent for 2021 — is now expected to bounce back by 15 percent as travel restrictions are relaxed more. By next year, the BSP thinks travel receipts will grow by 20 percent.
The financial account sector, in the meantime, is expected to have net inflows of $4 billion this year from $4.4 billion previous estimate. The actual 2020 results were a shortfall of $5.8 billion.
The BSP forecasts net foreign direct investments of $7.8 billion this year and $8.8 billion in 2022. Last year, FDI reached a net inflow of $6.5 billion.
As for net foreign portfolio investment, the central bank now estimates $5.7 billion from $3.5 billion earlie. This is expected to increase to $7.4 billion next year. Actual 2020 foreign portfolio investments reached $5.3 billion net inflows.
Last year, BOP surplus reached an all-time high of $16.02 billion with a hefty reserves buffer. There were more National Government net foreign borrowings to fund the pandemic response. The surplus was also due in part to weak import demand with constrained economic activities because of the lockdown.