The Bangko Sentral ng Pilipinas (BSP) said Friday it raised the projected 2024 balance of payments (BOP) surplus to $700 million on positive inflows of remittances, outsourcing revenues and tourism receipts.
The BSP’s policy-setting Monetary Board released its 2024-2025 BOP outlook showing a higher forecasted surplus this year from the earlier estimate of $400 million.
It said, “the overall BOP position in 2024 is projected to settle at a slightly higher surplus relative to the previous forecast, on the back of the estimated narrower current account gap for the year and modest inflows of non-resident investments.”
The actual surplus reached $3.7 billion in 2023, a reversal of the $7.3-billion deficit in 2022.
The BSP also projected a lower current account deficit of $6.1 billion this year, compared to the previous forecast of $9.5 billion. In 2023, the actual current account deficit amounted to $11.2 billion, lower than $18.3 billion in 2022.
It said the expected lower current account deficit reflects the revision of both goods imports and exports growth forecasts relative to the previous forecast round, with the latter factoring in the latest insights by major export industry associations, including the semiconductors and electronics industries, which project a flat growth in electronics exports for 2024.
“The lower CA deficit likewise considers waning pent-up demand and lingering upside risks to domestic inflation alongside the impact of monetary tightening which could dampen overall economic activity over the near term,” it said.
Meanwhile, the BSP said prospects for business process outsourcing (BPO) revenues, travel receipts and overseas Filipino (OF) remittances, remain positive as demand for high-contact services continue to rebound.
“Foreign directed investments [FDIs] as well as foreign portfolio investments [FPIs] are projected to register moderate net gains, supported by the government’s thrust to fully implement key amendatory laws that eased rules on foreign investor participation in key industries as well as its plan to keep infrastructure spending at above 5.0 percent of GDP,” the BSP said.
It said that for 2025, the overall BOP position would likely reverse to a deficit of $500 million, attributed to the foreseen widening of the trade-in-goods gap and further reduction in the projected financial account inflows.
“The larger shortfall in goods trade is primarily due to the faster increase in goods imports mainly on account of the strong growth in public infrastructure investments,” the BSP said.
“Given that merchandise trade is roughly 2.3 times the level of services trade [based on 2023 figures], the estimated sustained positive performance of both travel and BPO sectors, manages to only partially offset the trade-in-goods deficit,” it said.
Meanwhile, the BSP said capital inflows are expected to moderate further in 2025 on the back of more subdued inflows of non-resident investments, as next year would be a transition year for many major economies, particularly the US and the UK, following the conduct of elections in the latter part of this year.