The country’s current account surplus reached an all-time high of $12.979 billion in 2020, reversing the $3.047 billion shortfall in 2019, based on Bangko Sentral ng Pilipinas (BSP) data.
The current account surplus – which is a record high based on BPM6-series and not comparable to older series -- is equivalent to 3.6 percent of GDP from 0.8 percent in 2019. BPM6 is the standardized reporting of the Balance of Payments and International Investment Position, sixth edition, adopted by the International Monetary Fund.
The BSP has revised its 2021 current account surplus higher to $9.1 billion or 2.3 percent of GDP from its previous (December 2020) estimate of $6.1 billion or 1.5 percent of GDP. For 2022, the current surplus is expected to reach $5.2 billion or 1.2 percent of GDP.
BSP director for the Department of Economic Research, Zeno Ronald R. Abenoja said Friday that the current account posted a huge surplus in 2020 because of the “hefty reduction in the trade in goods deficit, which more than offset the decline in net receipts of primary and secondary income.”
For the fourth quarter 2020, the current account posted a surplus of $4.173 billion, reversing the $342 million deficit same period in 2019. “This was attributed mainly to the narrowing of the deficit in trade in goods account. Trade in services recorded higher net receipts, while net receipts of primary and secondary income declined during the quarter,” said Abenoja, in presenting the fourth quarter 2020 balance of payments (BOP) report.
For 2021, the BSP estimates a BOP surplus of $6.2 billion or 1.6 percent of GDP from actual BOP surplus of $16 billion or 4.4 percent of GDP in 2020.
“This revision is consistent with the expected higher current account surplus this year of $9.1 billion relative to the previous projection of $6.1 billion (1.5 percent of GDP),” said Abenoja. He also said that the “upward revision in the current account considers the anticipated broad-based recovery in both goods and services trade amid expectations of a vaccine-backed and policy-supported resumption of global and domestic economic activities this year.”
The BSP’s growth forecasts for goods exports and imports were increased to eight percent and 12 percent, respectively, from five percent and eight percent earlier estimates (December).
“On balance, the latest BOP assessment for 2021 reflects optimism amid expectations of gradual strengthening of the economy anchored mainly on positive developments on the rollout of COVID-19 vaccines, better-than-anticipated global growth momentum and continued strong government support to stimulate recovery,” said Abenoja.
“While the 2021 external account figures are projected to post improvements given brighter prospects globally and domestically, with the latter potentially gaining from expected strong rebound in its major trading partners such as the US, Japan, and China, the outcomes are expected to remain below pre-COVID levels in nominal terms,” he said. He also added that the “risk of surging infections amid emergence of new and more transmissible variants of the virus coupled by slow vaccine deployment could cast a shadow on the projected recovery path as these could continue to restrict movement of people, goods and services.”