ASEAN KEY DESTINATIONS
PHL’s 2017 current account hits record deficit of $2.5-B
The country’s current account registered a record deficit in 2017, caused by a wider shortfall in merchandise trade, the Bangko Sentral ng Pilipinas (BSP) reported on Friday.
BSP Governor Nestor Espenilla Jr. sees the current account deficit as a normal occurrence related to an economy such as the Philippines.
“The wider current account deficit is actually equivalent to about 0.8 percent of GDP (gross domestic product) only. That’s quite manageable and sustainable,” Espenilla told GMA News Online.
“The deficit is normal for a fast growing economy like the Philippines that’s ramping up investments,” he said.
A major component of the balance of payments, the current account posted a deficit of $2.5 billion, more than double the $1.2 billion recorded in 2016.
The 2017 deficit was the highest on record since 2005, Rosabel Guerrero, BSP director of Economic Statistics, told reporters in a briefing in Manila.
“If you look at the series Balance of Payments Manual Sixth Edition, which started in 2005, we have two deficits recorded, one was in 2016, and this year is the highest,” she said.
However, if the current account shortfall is compared with the Balance of Payments Manual Fifth Edition, which started in 1999, the 2017 figures would have been much narrower than the $2.875-billion deficit recorded in 1999, Guerrero noted.
The current account is a record of a country’s transactions with the rest of the world, particularly the net in trade in goods and services, the net earnings on cross-border investments, and the net transfer payments over a defined period, according to Investopedia.
Ruben Carlo Asuncion, chief economist at Union Bank of the Philippines, expected the wider current account deficit.
“A wider deficit is largely perceived as bad, but, for an emerging economy like the Philippines that has rarely spent on infrastructure in years and has lagged behind its peers, this is not necessarily bad,” he said.
“As long as the economy has enough absorptive capacity, the trade deficit is a necessary condition for a higher growth trajectory,” Asuncion noted.
The current account deficit was a result of a widening trade-in-goods deficit, which more than offset the higher net receipts in trade-in-services, and secondary and primary income accounts during the year, Guerrero noted.
“The trade-in-goods deficit for full-year 2017 went up by 15.9 percent to $41.2 billion as the 14.2-percent growth in imports of goods outpaced that of exports of goods at 12.8 percent,” she said.
Net receipts under the trade-in-services account stood at $9.5 billion, compared with $7 billion in 2016.
“The 34.8-percent expansion was accounted for by an increase in net receipts in other business services, particularly technical, trade-related, and other business services as well as computer services," Guerrero said.
“Earnings from BPO services for full-year 2017 amounted to $22.1 billion or a growth of 9.6 percent,” she said.
The primary income account increased by 20 percent to $3.1 billion from $2.6 billion due to a higher net compensation inflow from resident overseas Filipino, according to the BSP.
Secondary income grew by 5.5 percent to $26.1 billion on the back of a 4.1-percent increase in remittances of non-resident overseas Filipino workers amounting to $24.1 billion, it said. —VDS, GMA News
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