Bangko Sentral ng Pilipinas Deputy Governor Diwa Guinigundo expects remittances, business process outsourcing revenues and tourism receipts to recover in the second half, allowing the balance of payments to cut its full-year deficit to $500 million.
“We believe that the second half will show a stronger external payments position on account of the usual current account flows including OFW remittances, tourism receipts and BPO revenues,” Guinigundo said.
Latest data showed that BOP, representing the country’s transactions with the rest of the world, incurred a deficit of $706 million in the first half.
“So the $500-million expected shortfall is still doable. FDIs [foreign direct investments] are also expected to come in stronger in the second half,” Guinigundo said.
The BOP deficit dragged the peso to a 10-year low this year. The local currency closed at 50.71 against the US dollar on July 21.
Remittances are projected to grow by a conservative 4 percent in 2017. Money sent home by overseas Filipinos reached $11.346 billion in the first five months alone, up 4.5 percent from $10.859 billion a year ago.
Remittances and BPO revenues account for around $50-billion inflows annually which provide strength to the country external payments position.
Bangko Sentral revised its BOP position projection this year to a deficit of $500 million from the earlier assumption of $1-billion surplus amid the subdued outlook for emerging market economies and possible impact of the policies of US President Donald Trump on regional growth.
Latest data from Bangko Sentral showed that the country’s balance of payments reversed to a deficit of $569 million in June from a surplus of $418 million a year ago, driven by corporates’ higher demand for foreign exchange and the government’s settlement of its foreign debts.