The Bangko Sentral ng Pilipinas said Friday it revised downward the balance of payments surplus projection this year to $4.1 billion from $7.1 billion, as it took a more guarded view of global developments for the rest of the year.
Zeno Ronald Abenoja, managing director of the BSP’s Department of Economic Research, said in an online briefing the revision reflected the uncertainty posed by the lingering pandemic.
Abenoja said other factors considered for the revision were the expected lower current account surplus and the widening of trade-in-goods deficit.
“The current 2021 BOP assessment takes on a more guarded view of global and domestic economic developments going into the remaining months of the year. While global growth forecasts have been relatively unchanged from earlier estimates, domestic growth prospects have been scaled down [from 6-7 percent to 4-5 percent],” Abenoja said.
He said two risks affected the latest external sector assessment, including the rapid spread of the more transmissible COVID-19 Delta variant which led to recent spikes in infection cases and more austere mobility restrictions and the supply and logistical issues in vaccine administration, rendering the achievement of herd immunity more elusive and delaying plans to further open economies.
“Nonetheless, the continued strong government policy support alongside a more targeted implementation of quarantine measures is expected to help the Philippine economy gradually carve a path towards a safe recovery,” Abenoja said.
The new $4.1-billion BOP surplus projection for 2021 is lower than the actual BOP surplus of $16 billion last year. BOP is the difference between payments into and out of a country over a period.
Abenoja said the current account would likely post a surplus of $3.5 billion this year, down from the estimate of $10-billion surplus made in the second quarter 2021.
He said that in 2022, BOP would continue to post a surplus, but at a lower level of $1.7 billion, a downward revision from the previous estimate of $2.7 billion surplus.
The Monetary Board approved the new set of 2021 and 2022 BOP projections during the Sept. 16, 2021 meeting.
Abenoja said global and domestic economic activities were expected to fare better next year, with recovery more firmly underway on expectations of contained COVID-19 cases as most economies inoculated a greater share of their population.
Cash remittances, one of the country’s pillars of growth, are seen to pick up at a faster pace of 6 percent in 2021, an upward revision from the 4-percent estimate made in the second quarter of 2021.
“Lending support to this upward revision are the sustained inflows of OF [overseas Filipino] remittances of 6.4 percent in the first half of 2021; increased global demand for foreign workers as host economies transition to recovery mode; and enhanced access to digital financial services to facilitate remittance transfers,” Abenoja said.
Remittances are expected to grow by 4 percent next year.
Meanwhile, the gross international reserves are seen settling at $114 billion this year, lower than the previous projection of $115 billion, taking into account the outflows from foreign currency withdrawals of the national government from its deposits with the BSP to pay its foreign currency obligations and fund various expenditures.
Abenoja said the GIR 2021 forecast “also reflects the infusion of $2.8 billion in Special Drawing Rights following the IMF’s allocation to member countries last Aug. 23, 2021.”
GIR ended at a record high of $110 billion in 2020.