CLARK, Pampanga -- An economist of Barclays forecasts continued widening of the Philippines’ current account deficit to above two percent of gross domestic product (GDP) as the country imports more to meet rising domestic demand, while not exporting nearly as much.
The current government’s massive infrastructure program is seen to result to wider current account deficit in the next couple of years, Rahul Bajoria, Director of the Research unit of investment bank Barclays said in a briefing at the sidelines of the site visit by economists, bank analysts and portfolio strategists at the New Clark City here.
In 2017, the country registered a current account deficit amounting to USD2.5 billion, about 0.8 percent of domestic output.
The deficit has resulted to the decline of the country’s balance of payment (BOP) position.
However, Bajoria said the Philippines’ current account continues to have structural backing, citing the strong flows of remittances from Overseas Filipino Workers (OFWs), among others.
On Tuesday, the Bangko Sentral ng Pilipinas (BSP) reported that BOP as of end-August this year posted a deficit of USD2.44 billion,
It traced this deficit partly to widening trade deficit as the country imports more raw materials, intermediate goods and capital goods on back of higher domestic requirements.
On the other hand, BOP last August alone posted a USD1.27 billion surplus, an improvement from the USD7 million deficit in August 2017.
“Inflows in August 2018 stemmed mainly from net foreign currency deposits of the National Government (NG) and income from the BSP’s investments abroad during the month,” the central bank said in a statement.
“These were partially offset, however, by the payments made by the NG for its foreign exchange obligations and foreign exchange operations of the BSP during the month in review,” it added. (PNA)