The Bangko Sentral ng Pilipinas (BSP) said Friday it upgraded the projected 2024 and 2025 balance of payments (BOP) surplus on narrowing trade gap and higher non-resident investment inflows.
The BSP’s policy-setting Monetary Board released its 2024-2025 BOP outlook showing a higher forecasted surplus this year to $1.6 billion from an earlier estimate of $700 million. The country posted a BOP surplus of $3.7 billion in 2023.
“For 2024, the overall BOP position is seen to register a relatively higher surplus than earlier expected, on the back of a lower current account deficit combined with higher non-resident investment inflows,” the BSP said.
“The lower current account shortfall is anchored on the narrowing of the merchandise trade gap as growth in goods imports is estimated to moderate due, in turn, to easing in import prices while the goods exports are expected to remain on a steady recovery pace,” it said.
The BSP said the sustained upbeat growth prospects for travel receipts and business process outsourcing revenues, consistent with the insights provided by export industry associations, continue to support the current account along with steady remittance inflows from overseas Filipinos (OFs).
“Meanwhile, both foreign direct investments [FDIs] and foreign portfolio investments [FPIs] are projected to yield higher net inflows following strong first quarter figures. The same is reinforced by the ongoing operationalization of the implementing rules and regulations of key investment reforms aimed at providing a more conducive business environment in the country,” the BSP said.
“The ample level of international reserves lends solid support to the external sector prospects in 2024,” it said.
The overall BOP position is also projected to post a surplus of $1.5 billion in 2025, from an earlier projection of $500-million deficit.
It upgraded the 2025 BOP position on narrower current account balance attributed mainly to the foreseen lower merchandise trade gap and higher financial account inflows.
“While services trade receipts are expected to continue to post robust growth, these are unlikely to offset the trade deficit given the sheer size of the goods imports account,” the BSP said.
“Non-resident investment flows are expected to sustain gains, albeit modest, with investors anticipated to act with caution amid possible policy shifts as new political leaders in more than 50 economies are seated by next year,” it said.
The BSP said, however, the lingering geopolitical conflict between Russia and Ukraine as well as Israel over Gaza, with the latter at heightened risk of escalating to the wider Middle East region, could continue to cloud the external sector forecasts for next year.