During the first four months of 2001, the current account continued to be in surplus at $1.014 billion. This developed as the balance of trade in goods registered a positive position of $902 million. The decline in exports was matched by a drop in imports. Goods exports declined by 4.1 percent following the slowdown in the U.S. and Japanese economies as well as the downturn in the electronics business cycle. Machinery and transport equipment, garments and electronics continued to be the top three export earners.
Imports also declined by 4.1 percent. The contraction was noted in all commodity groups, except mineral fuels and lubricants. Imports of capital goods, consumer goods as well as raw materials and intermediate goods dropped by 9.4 percent, 2.4 percent, and 0.9 percent, respectively, reflecting the slow economic recovery.
During the review period, net inflows of foreign direct investments amounting to $353 million were realized. These were channeled to the telecommunication, banking and finance, manufacturing, real estate and transportation sectors.
On the other hand, there was a net outflow of portfolio investments amounting to $1.628 billion due mainly to higher repayments on maturing bonds and notes. The outflow stemming from repayments of debt securities more than offset the net inflow of investments in the local equities market.
Meanwhile, the other investments account registered a higher net outflow compared to the year-ago level due primarily to lower reflows of currencies and deposits of residents with banks abroad.
As a result of these developments, the overall BOP yielded a deficit of $755 million for the first four months of the year, a reversal of the year-ago surplus of $803 million.
As of end-April 2001, the country’s gross international reserves stood at $14.44 billion, a level sufficient to cover 4.3 months’ worth of imports of goods and payment of services and income. Foreign reserves were also enough to cover more than twice the country’s level of short-term foreign exchange liabilities.
Relative to the program level, the current account surplus was $677 million lower. This was on account of the lower-than-expected performance of the income account. Despite this development, the overall BOP deficit was lower than the programmed level as commercial banks posted a lower-than-projected net outflow of financial resources.