Faster growth in exports than in imports narrowed the Philippine current account deficit to $12.5 billion in the first nine months of the year, from $13.34 billion in the same period last year.

This translates to 3.6 percent of gross domestic product (GDP) from four percent in the same period a year ago. A current account deficit means the country is a net borrower from abroad to cover the shortfall.

Despite the improvement, the current account deficit still contributed to the balance of payments’ (BOP) full swing from a $5.12 billion surplus to a $5.32 billion deficit during the nine-month period, owing to “tighter global financial conditions and lingering trade uncertainties.”

The current account measures the country’s net dollar earnings from trade in goods and services and income from overseas Filipino workers.

“Imports were supported by demand for telecommunications equipment, electrical machinery, and passenger vehicles,” the BSP said. It expanded by 4.6 percent to $136.33 billion from $130.32 billion in the same period last year.

“Exports remained resilient on the back of strong global demand for manufactured goods, minerals, and electronics,” the BSP said. It grew faster by 5.9 percent to $123.83 billion from $116.98 billion a year ago.

“Meanwhile, inflows from income accounts, particularly remittances from overseas Filipinos (OF), and services receipts from the business process outsourcing (BPO) sector and travel services continued to provide a buffer to the external position.”

Net primary income grew to $3.79 billion as of end-September, higher by 8.7 percent than $3.49 billion in the same period last year. Net secondary income climbed 2.9 percent to $23.96 billion from $23.28 billion.

Net primary income refers to the difference between the country’s earnings from overseas—including wages of overseas Filipino workers (OFWs) and profits from local investments abroad—and its expenses, such as payments to foreign lenders.

Secondary income includes remittances from non-resident OFWs and other current transfers like gifts, grants, and donations.

Meanwhile, net inflows in the financial account improved to a $12.2 billion deficit from a wider $21.63 billion deficit in the same period last year. This narrowing was driven by the improvement in portfolio investments and other investment inflows.

On the other hand, the BOP’s capital account posted a $77-million surplus in the first nine months, rising 43.5 percent from $54 million a year earlier.

As of end-September, the country’s gross international reserves (GIR), or its US dollar stock, dropped 3.2 percent to $109.1 billion from $112.7 billion in the same period a year earlier. The GIR consists of foreign assets held by the BSP, such as foreign-issued securities, gold, and foreign exchange (forex).