The Philippines posted a current account surplus of $4.4 billion in the second quarter at the height of the lockdown period, a reversal of the $931-million deficit registered a year ago, the Bangko Sentral ng Pilipinas said Friday.
BSP Deputy Governor Francisco Dakila said the current account surplus stemmed mainly from the lower trade in goods deficit of $5.4 billion in the second quarter, which was lower than the $12.1-billion trade deficit in the same quarter last year.
“This more than offset the decline in net receipts of trade in services to $2.7 billion [from $3.3 billion], primary income to $1 billion [from $1.2 billion] and secondary income to $6.1 billion [from $6.7 billion],” Dakila said during a virtual briefing on the second-quarter balance of payments report.
The overall BOP position also recorded a higher surplus of $4.2 billion in the second quarter, compared to the $991-million surplus a year earlier.
Dakila said the sluggish performance of both imports and exports of goods reflected the adverse impact of the COVID-19 pandemic, including the disruptions in the global demand and supply chains.
He said net receipts in the capital account decreased to $8 million in the second quarter from $22 million a year ago. This was on account of the combined effect of net payments on gross acquisition of non-produced nonfinancial assets of $8 million (from $1 million net receipts on gross disposal of non-produced nonfinancial assets) and lower receipts of other capital transfers to the national government amounting to $16 million from $20 million.
The financial account registered net outflows of $152 million in the second quarter, a turnaround from the $278-million net inflows in the same period last year. This was mainly on account of the reversal of portfolio investments to net outflows of $731 million from net inflows of $1.9 billion.
This reversal was tempered by the decline in net outflows of other investments to $548 million (from $2.4 billion) and the increase in net inflows of direct investments to $1.1 billion (from $727 million).
“The favorable outturn in second quarter BOP position brought the cumulative surplus for the first half of 2020 to $4.1 billion, although lower than the $4.8-billion surplus registered in the same period last year. This decline in the surplus was due to the reversal of the financial account to net outflows,” Dakila said.
Portfolio investments, also called hot money, reversed to net outflows on concerns of a global economic slowdown amid the health crisis.
Other investments registered higher net outflows on residents’ net repayment of their liabilities. However, these outflows were mitigated by higher net inflows in direct investments.
The BOP posted a $7.8-billion surplus in 2019. The BSP was expecting the 2020 BOP to post a lower $0.6-billion surplus because of the impact of the pandemic and geopolitical tensions among larger economies. It also expects BOP to register a $2.4-billion surplus in 2021.