The Philippines’ current account deficit shrank by 38.6 percent to $11.2 billion last year (equivalent to -2.6 percent of the country’s gross domestic product) from P$18.3 billion in 2022 (equivalent to -4.5 percent of the country’s GDP)

The Bangko Sentral ng Pilipinas said “The lower current account deficit emanated from the narrowing trade in goods deficit, alongside the increase in net receipts from the trade in services and secondary income accounts. This was partly mitigated by the lower net receipts in the primary income account.”

The trade in goods deficit narrowed as the contraction in the value of goods imports outpaced that of exports. An estimated 91.5 percent of the drop in the imports value and 92.6 percent of the decrease in exports value were due to price changes. 

Current account deficit surged 942 percent in the fourth quarter of 2023 to $520 million (equivalent to -0.4 percent of the country's GDP) from a deficit of $50 million (equivalent to -0.04 percent of the country's GDP) in the same period of 2022.

During the fourth quarter, an estimated 81.4 percent of the drop in the exports value and 64.8 percent of the decrease in the imports value were driven by price changes.

The country’s balance of payments (BOP) position registered a surplus of $3.7 billion last year, 150 percent more than the $7.3 billion deficit in 2022. Surplus amounted to $1.9 billion in the fourth quarter of 2023, more than thrice the $568 million surplus recorded in the same period of 2022. 

The BOP surplus was driven by the contraction of the current account deficit along with the expansion of the financial account net inflows.

Meanwhile, the capital account registered a surplus of $67 million in 2023, almost triple or 190 percent more than the surplus of $23 million in 2022.

This was due mainly to net receipts from gross disposals of non-produced non-financial assets (patents, trademarks, and copyrights) of $2 million in 2023 from net payments of gross acquisitions of $51 million in 2022.

Capital account recorded net receipts of $21 million in the last quarter of 2023, up by 26.4 percent from the $16 million net receipts recorded in the same period in 2022. 

Net receipts from gross disposals of non-produced non-financial assets (patents, trademarks, and copyrights) amounting to $4 million in the fourth quarter of 2023 from $1 million net payments from gross acquisitions in the last quarter of 2022.

The financial account recorded net inflows (or net borrowings by residents from the rest of the world) of $15.4 billion in 2023, 10.8 percent higher than the $13.9 billion in 2022. 

This was due primarily to the surge in net inflows from the other investment account. This, however, was mitigated by the reversal of the portfolio investment account to net outflows and the decline in net inflows of direct investments.

Financial account amounted to $6.4 billion in the fourth quarter of 2023, higher by 208.5 percent than the $2.1 billion net inflows in the same period of  2022. 

This was mainly on account of the reversal of the other investment account to net inflows (from net outflows) and higher net inflows in the portfolio investment account. Meanwhile, the direct investment account registered lower net inflows during the period.