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BSP revises its balance of payments projections for 2016

06.17.2016

The BSP releases its reassessment of the 2016 balance of payments (BOP) projections. This incorporates the latest available data, and reflects recent and prospective economic developments, both domestic and global, that could have a bearing on the outlook for the country’s external payments position.

The overall BOP surplus in 2016 is expected to slightly taper to US$2.0 billion from US$2.2 billion in the December 2015 projection exercise. While the projected surplus in the current account balance has been revised upward, the financial account is expected to reverse to an outflow from an initially-projected slight inflow in 2016. As a result, year-end gross international reserves (GIR) are anticipated to be around US$82.7 billion (without revaluation), an improvement from the actual US$80.7 billion posted in 2015. At this level, the GIR remain ample, covering around nine (9) months’ worth of imports of goods and payments of services and income.

The 2016 current account surplus is seen to be higher at US$5.8 billion, equivalent to 1.9 percent of GDP, compared to US$5.7 billion in the December 2015 projection exercise.  This is due to the expected higher receipts from the services and primary income accounts. This is notwithstanding the expected widening of the trade deficit with the larger downward revision in the level of exports than that of imports. The full year growth for goods exports in 2016 is seen to moderate to 3.0 percent from an expected growth rate of 5.0 percent in the December 2015 projection exercise. This considers the subdued outlook for the global economy and further decline in commodity prices. Meanwhile, goods imports for 2016 is expected to grow by 7.0 percent, lower than the earlier projection of 10.0 percent in December 2015, on account of the decline in energy and metal prices.  The sustained surplus in the current account is expected to be supported by overseas Filipino (OF) remittances and robust receipts from business process outsourcing (BPO) and tourism. 

The initially-projected small net inflow in the financial account in 2016 has been revised to a slight net outflow amounting to US$0.5 billion. This is to reflect the anticipated higher residents’ acquisition of financial assets abroad as the US Federal Reserve hiked its policy rate in end-2015 and is expected to do so in the second semester of 2016. While the global financial environment is expected to remain volatile, the bullish business confidence is expected to support continued entry of foreign direct investments (FDI) in the country.

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