The balance of payments for March was in surplus ($575 million) in contrast to the deficits recorded in January and February. This developed as a result of lower net outflows in the capital and financial account. The March surplus helped narrow down the BOP deficit for the first quarter of 2001 to $512 million.
The current account showed a surplus of $1.3 billion during the first quarter as the merchandise trade surplus rose significantly following the faster decline of imports relative to exports. Merchandise exports declined slightly by 0.6 percent due to lower electronics exports, and the slowdown in the growth of garments and machinery and transport equipment exports. These items, however, continued to be the top three leading export earners. Weak exports reflected the slowdown in the US and Japanese economies and the downturn in the electronics cycle.
Meanwhile, imports declined by 8.0 percent. The contraction was observed across all commodity groups, except mineral fuels and lubricants. Capital goods, consumer goods and raw materials and intermediate goods dropped by 13.0 percent, 6.0 percent, and 4.7 percent, respectively, reflective of the relatively weak economic growth.
There was a net inflow of foreign direct investments amounting to $326 million during the first quarter, the bulk of which were channeled to the telecommunication, banking and finance, manufacturing and real estate sectors.
The portfolio investments account reversed to a deficit of $996 million from a surplus of $123 million due to the combined effects of higher repayments on maturing bonds and notes as well as lower issuance of new bond/notes. This developed in spite of a net inflow of investments in the local equity market.
Meanwhile, larger net outflows of other investments (consisting of loans as well as currency and deposits of commercial banks) were realized relative to last year’s level due mainly to lower reflows of currencies and deposits of residents.
During the first quarter of 2001, a comfortable level of reserves was achieved amounting to $14.7 billion, sufficient to cover 4.4 months of imports of goods, services and income.
Relative to the program level, the current account surplus was $23 million higher, following the better-than-expected performance in the trade-in-goods account. Notwithstanding this, the overall BOP deficit contrasted with the projected surplus of $298 million as a result of higher-than- projected net outflows of both short-term and medium- and long-term loans.