The Bangko Sentral ng Pilipinas said Friday it expects a balance of payments deficit of $100 million in 2023, smaller than the previous estimate of $1.2-billion shortfall, on sluggish merchandise imports and recovery of international tourism.
“For 2023, the overall BOP position is projected to register a smaller deficit owing mainly to the foreseen narrower current account gap for the year,” the Bangko Sentral said in a statement. Data showed that in 2022, the BOP resulted in a deficit of $7.3 billion, a turnaround from the $1.3-billion surplus in 2021.
The Monetary Board approved the new set of 2023 and 2024 balance of payment projections in its Sept. 14, 2023 meeting. The latest projections incorporated the latest available data and recent emerging developments.
“The 2023-2024 forecasts for overall BOP position have been revised to reflect the estimated narrower current account shortfall over the forecast horizon. This development is hinged mainly to the expected contraction in goods exports and goods imports,” it said.
It said partly offsetting such outcome is the upward revision in services exports, bolstered by the higher growth forecast for travel receipts alongside expectations of sustained growth momentum of business process outsourcing (BPO) revenues.
The current account is expected to post a deficit of $11.1 billion this year, lower than the previous estimate of $15.1-billion shortfall.
Meanwhile, the BSP lowered the forecasts for foreign direct investments (FDIs) and foreign portfolio investments (FPIs) from the June projection, after taking into account the actual data in the first half of the year and the latest global and domestic growth prospects.
Net FDIs are expected to settle at $8 billion this year, down from the previous estimate of $9 billion, while FPIs were projected to post a lower net inflow of $2 billion from $2.5 billion.
It retained the remittance growth forecast at 3 percent this year, but reduced the year-end gross international reserves (GIR) forecast to $99.5 billion from $100 billion.
The BOP is expected to post a surplus of $1 billion in 2024, an improvement from the previous forecast of $500-million shortfall.
“BOP is seen to pivot into a surplus position, propped up by expectations of sustained improvements in the current account as well as the financial account. While the narrative surrounding the prospects for next year remain broadly unchanged, exercising vigilance is warranted as some risks may intensify,” the BSP said.
“With the International Monetary Fund’s growth forecast for world trade in 2024 at 3.7 percent, a 0.2 percentage point improvement from the previous report, and global economic activity sustained at 3.0 percent, pick up in global trade activity is likely to ensue by next year sans any surprises,” the BSP said.
The BSP said prospects for goods imports are supported in part by the national government’s plan to catch-up on its spending and accelerate infrastructure development in the country, it said.
“With the GDP growth target maintained at 6.5 to 8.0 percent in 2024 and operationalization of the implementing rules and regulations of recently enacted investment-friendly legislations, investment opportunities could widen,” the BSP said.
The BSP also retained its forecast of $102-billion GIR for 2024.
The BSP noted limitations to the forecasts, given the continued buildup of external challenges. “The BSP will continue to monitor closely emerging external sector developments and risks and how these may impact the BSP’s fulfillment of its price and financial stability objectives,” it said.