The Bangko Sentral ng Pilipinas (BSP) said over the weekend it expects improvements in the balance of payments (BOP) position in 2024 and 2025 on sustained positive global and domestic economic growth prospects, decelerating inflation and pickup in world trade activity.
The BSP’s policy-setting Monetary Board released its 2024-2025 BOP outlook showing a higher forecasted surplus this year to $2.3 billion or 0.5 percent of the gross domestic product, from the earlier estimate of $1.6 billion or 0.3 percent of GDP.
It said that for 2025, the BOP position is expected to yield a surplus of $1.7 billion or 0.3 percent of GDP, also up from an earlier projection of $1.5 billion.
“The global economy is seen to expand at a stable pace in 2024 before inching up in 2025, backed by the upward adjustment in the growth forecast for emerging market economies, including China,” the BSP said.
“Given prospects of continued foreign exchange inflows into the economy, there is scope to expect further buildup in the gross international reserves for 2024 to 2025,” the BSP said.
The BSP expects the GIR to reach $106 billion in 2024 and $107 billion in 2025.
The BSP said the current account is expected to result in a deficit of $6.8 billion in 2024 and a deficit of $5.5 billion in 2025 due to the reduction in the growth forecasts for goods and services exports.
Merchandise exports are seen to deliver a more subdued performance as the local semiconductor industry, with its heavy reliance on legacy products and downstream assembly, does not appear to be benefitting from the AI-induced upturn in global electronics demand.
The BSP said the Philippine economy would maintain its growth momentum, supported by resilient domestic demand, lower inflation trajectory and timely enactment of the national budget.
“The continued government prioritization of infrastructure development combined with investment-related reforms are also seen to lend support to the BOP outlook through improvements in the overall business environment,” the BSP said.
“Emerging risks to the BOP outlook remain broadly balanced as factors impinging on the external sector accounts were fairly offset by upside considerations,” it said.
The BSP said that on the downside, commodity price volatility due to geopolitical and extreme weather events, trade tensions, and possible mobility risks from emergence/re-emergence of highly infectious diseases (such as monkey pox would weigh down on the country’s external sector prospects.
“On the positive side, indications of monetary policy easing by key trading partners amid decelerating inflation and improved economic growth outturn, as well as strong government support for trade and investment initiatives, including further reforms in the corporate tax regime, are factored into the latest assessment of the external sector outlook,” the BSP said.
