The country’s balance of payments (BOP) for the first seven months of the year showed a deficit of $267 million, a reversal of the $2,770 million surplus in the comparable period last year. The shortfall came from the net outflow in the capital and financial account, following net loan repayments and net withdrawals of foreign portfolio investments. By contrast, the current account continued its favorable performance owing to the sizable surplus in the trade in goods balance.
Exports of goods strengthened, growing by 12.2 percent during the first seven months of 2000. Export growth accelerated due to the strong export performance of machinery and transport equipment as well as garments. Electronics exports likewise grew, albeit at a slower rate during the first seven months of the year due mainly to the front-loading of electronics exports prior to the millennium crossover and to the soft prices of electronic goods.
Meanwhile, imports of goods expanded by 3.0 percent due primarily to the rise in imports of capital goods as well as imports of mineral fuels and lubricants. Imports of capital goods grew by 6.4 percent, reflecting the build-up in productive capacity by domestic firms gearing up for the rebound in the economy. Imports of mineral fuels and lubricants nearly doubled its year-ago level, reaching $2,158 million on account of the hike in the average price of crude petroleum. On the other hand, imports of raw materials and intermediate goods contracted by 9.0 percent.
In contrast to the current account, the capital and financial account yielded a deficit of $2,207 million, a reversal of the $1,974 million surplus posted during the year-ago level. This was due largely to net withdrawal of portfolio investments and other investments following negative investor sentiment in the region and investors’ concerns over domestic developments. Higher medium-and long-term loan repayments by the general government relative to availments also contributed to the outflow in the capital and financial account during the review period.
The external payments position brought the gross international reserves to $14,806 million as of end-July 2000, equivalent to 4.5 months worth of imports of goods, services and income.
Relative to the program levels, the current account surplus of $4.4 billion was higher by $2.3 billion while the capital and financial account deficit was wider than the program level by $1.9 billion. Meanwhile, the overall BOP deficit during the first seven months of the year was smaller by $225 million relative to the program deficit of $492 million.
See BOP table