“The favorable performance of the external sector in August reversed the cumulative balance of payments (BOP) for January-August 2000 to a surplus of $65 million from the $267 million cumulative deficit posted for January-July. This can be attributed to the continued surplus in the current account which more than offset the weakness of the financial account.
“Exports of goods grew by 12.1 percent during the first eight months of 2000, with electronics, machinery and transport equipment, and garments being the top gainers. A slowdown in electronics exports was noted during the period. This could be attributed to the transition from the observed surge in demand for electronics exports in the last quarter of 1999 and to the soft prices of electronic goods, particularly semiconductors.
“Likewise, imports of goods rose by 2.9 percent, pulled up by the 6.3 percent expansion in capital goods indicating capacity build-up, particularly in the telecommunication, electronics and electrical machineries sectors. Moreover, imports of mineral fuels and lubricants nearly doubled due to the higher unit price of petroleum crude in the world market even as the volume of oil imports declined. By contrast, imports of raw materials and intermediate goods contracted by 8.8 percent.
“Meanwhile, the modest rebound of both direct and portfolio investments in August reduced the deficit in the financial account to $228 million during the month from over $1 billion in July. Foreign direct investments were noted in the electronics and automotive components industries while the Samurai Bond issue of the National Government lifted portfolio investments for the month. Notwithstanding the improvement in direct and portfolio investments in August, the financial account remained weak during the eight-month period posting a net outflow of $3,060 million compared to a net inflow of $1,719 million in the same period last year.
“The external payments position brought the gross international reserves to $15,426 million as of end-August 2000. At this level, reserves were equivalent to 4.7 months worth of imports of goods, services and income.
“Relative to program level, the current account surplus of $5.6 billion was higher by $2.8 billion due to the higher-than-expected trade in goods surplus. In contrast, the capital and financial account deficit was wider by $2.7 billion relative to the program. This developed despite the better-than- anticipated performance in investments due mainly to lower medium-and long-term loan availments and higher net short-term loan outflows.
“Overall, the BOP performed better than the programmed level, recording a surplus of $65 million compared to the expected deficit of $201 million for the first eight months of the year.
“The BOP report for January-August 2000 BOP now reflects the first series of revisions as recommended by a technical assistance mission from the International Monetary Fund in October 2000, to provide a more accurate report on the external conditions of the economy for effective policy formulation.”