The Philippines posted a lower balance of payments (BOP) surplus of $1.441 billion as of end-June amid a narrowing trade deficit and net inflows registered by the central bank.

Based on the latest data from the Bangko Sentral ng Pilipinas (BSP) released Friday, July 19, the first semester BOP tally is lower than last year’s $2.66 billion. It is also lower than end-May's $1.596 billion.

The BSP said the cumulative BOP surplus resulted from the narrowing trade-in goods deficit and from the net inflows from personal remittances. It was also attributed to inflows from the trade in services, net foreign direct investments, net foreign borrowings by the national government (NG), and net foreign portfolio investments.

Based on preliminary data from the Philippine Statistics Authority’s International Merchandise Trade Statistics, the trade deficit for January to May this year totaled $20.6 billion, which was lower than the $23.7 billion deficit posted in the same period in 2023.

For the month of June alone, the country incurred a BOP deficit of $155 million, reversing the significant $1.997 billion surplus in May due to the NG payments of its foreign currency debt obligations.

The June shortfall was lower from $606 million same time last year. 

The BOP summarizes a country’s economic transactions with the rest of the world for a specific period. It is an accounting of the economic dealings between residents and non-residents. A BOP surplus position means there are more exports or inflows than imports or outflows, while a deficit position is the opposite.

Meanwhile, the BSP also announced the final gross international reserves (GIR) number on Friday of $105.188 billion as of end-June.

The BSP releases two GIR data in a month: a preliminary and a final GIR. The preliminary GIR, reported on July 8, was $104.7 billion.

The BSP said the “latest GIR level represents a more than adequate external liquidity buffer equivalent to 7.7 months’ worth of imports of goods and payments of services and primary income.” It is also equivalent to six times the country’s short-term external debt based on original maturity and 3.8 times based on residual maturity.

Last June 13, the BSP’s policy-making arm, the Monetary Board, revised the BOP forecasts for 2024 and 2025 on the back of the changing external accounts, the expected global economic recovery, and the country’s lower inflation.

For 2024, the BSP forecasts a higher BOP surplus of $1.6 billion versus its March estimate of only $700 million.

For 2025, the BSP is projecting a $1.5 billion BOP surplus, an improvement from its previous estimate of a $500 million deficit.

As for the GIR, the BSP also forecasts the US dollar reserves to close at $104 billion by the end of 2024. For 2025, the GIR is expected to be higher at $105 billion.

The BSP revised the previous BOP projections on account of the faster pace of global growth, easing global inflation and the recovery in the global electronics demand. The downside to the projections however could come from the moderate China growth and increased political and economic uncertainty including geopolitical tensions and weather-related shocks.