DOF ECONOMIC BULLETIN ON CURRENT ACCOUNT
 

 

The current account strengthened in the first quarter of 2018 as the current account deficit narrowed from 1.2% in 2017 to 0.27% in 2018. The current account is the balance of exports and imports of goods, services and income balances.

 

 

Table 1. CURRENT ACCOUNT

2017

2018

 

Jan-Mar

Jan-Mar

CURRENT ACCOUNT BALANCE (US$M)

(860)

(208)

CURRENT ACCOUNT SURPLUS (% OF GDP)

-1.20%

-0.27%

 

The deficit in the trade in goods balance widened by 7.2% to US$10.4B, from 13.56% of GDP to 13.64% of GDP as imports rose faster than exports on account of investment goods purchased from abroad to bolster productive capacity.  This allowed the economy to grow by 6.8% in the first quarter, one of the highest growth rates in Asia.
 

 

However, this deficit was more than offset by the surplus in the trade in services and income balances which rose by 15.33% to US$10.18B, from 12.36% of GDP to 13.36%. Earnings from BPOs, remittances inflows and earnings from investments abroad by Filipino citizens accounted for these substantial receipts.
 

Table 2. TRADE IN GOODS & TRADE IN SERVICES BALANCES

   

 

 

2017

2018

 

 

Jan-Mar

Jan-Mar

Growth

TRADE IN SERVICES & INCOME BALANCES, US$M

8,824

10,117

15.33%

% OF GDP

12.36%

13.36%

 

TRADE IN GOODS, BALANCE (US$M)

-9,683

-10,385

7.2%

TRADE IN GOODS, BALANCE (% of GDP)

-13.56%

-13.63%

 
       

 

Net exports of services grew by 67.6% from US$1.77B to US$2.96B. This is accounted for by earnings of BPOs and tourism less imports of services.
 

 

Primary income which is accounted for by earnings of the country from placements abroad less earnings by other countries from local placements grew by 10.1% from US$681M to US$750M. 
 

 

On the other hand, secondary income which is accounted for by remittances accruing to OFWs less incomes of expatriates remitted abroad also grew by 1.4%, from US$6.4B to US$6.5B.

 

TABLE 3. SERVICES TRADE & INCOME BALANCE

   

 

 

2017

2018

 

 

Jan-Mar

Jan-Mar

Growth

TOTAL (SERVICES & INCOME)

8,824

10,117

15.33%

% OF GDP

12.36%

13.36%

 

TRADE IN SERVICES, BALANCE (US$M)

1,766

2,960

67.6%

TRADE IN SERVICES, BALANCE (% of GDP)

2.47%

3.89%

 

PRIMARY INCOME, BALANCE (US$M)

681

750

10.1%

PRIMARY INCOME, BALANCE (% of GDP)

0.95%

0.98%

 

SECONDARY INCOME BALANCE (US$M)

6,377

6,467

1.4%

SECONDARY INCOME, BALANCE (% of GDP)

8.93%

8.49%

 


DOF View

The current account remains healthy with the current account deficit declining in the first quarter of 2018 compared with last year. Maintaining good macroeconomic fundamentals by keeping the budget deficit manageable, keeping interest rates at the level that sustains the volume of investments and allowing the exchange rate to maintain its competitive level will enable the country to sustain economic growth in the medium-term.