NEW balance of payments (BoPs) forecasts have been approved by monetary authorities, with a surplus expected this year and a swing to a deficit in 2024.
"The emerging external outlook for 2024 and 2025 is largely underpinned by expectations of a slight improvement in global economic conditions, particularly for this year; and improvements in domestic demand conditions over the next two years," the Bangko Sentral ng Pilipinas (BSP) said in a statement on Friday.
Instead of a $400-million surplus, the country's BoP position will likely end 2024 at a $700-million surplus, the central bank said.
The outlook for 2025, meanwhile, is a deficit of $500 million.
The BoP hit a surplus of $3.7 billion last year, exceeding the $1.1-billion target. It was also a turnaround from 2022's $7.3-billion deficit, which was also the highest since 2000.
The BoP position will again end this year in a surplus, the BSP said, "on the back of the estimated narrower current account gap for the year and modest inflows of nonresident investments."
The 2024 current account deficit is now expected to be a narrower $6.1 billion, instead of $9.5 billion previously, for a consequently lower 1.3 percent of gross domestic product instead of 2.0 percent.
Merchandise exports and imports forecasts were lowered to $57 billion and $126 billion from the previous $58.2 billion and $132.2 billion, respectively. Expected growth as a result fell to 3.0 percent and 4.0 percent from the previous 5.0 and 7.0 percent.
The projection for services exports was also lowered to $56.0 billion from $56.8 billion while that for imports was increased to $32.1 billion from $30.3 percent. The growth outlooks remained at 16 percent and 10 percent, respectively.
Forecasts for outsourcing revenues, travel receipts and cash remittances were maintained.
The financial account deficit forecast, meanwhile, was lowered to $6.2 billion from $9.3 billion, with foreign direct investments (FDIs) expected to hit a net $9 billion, down from the previous $10-billion forecast.
Expectations for foreign portfolio investments (FPI) were also slashed to $1.3 billion from $1.7 billion.
Gross international reserves (GIRs), lastly, were forecast to close out the year at $103 billion instead of $102 billion.
"Risks to the outlook during this review period are seen to be broadly balanced and less tilted to the downside relative to the previous forecast round," the BSP said.
"The upside risks to global growth prospects for this year are emanating mainly from the recent upgrades in the growth forecasts for the United States, China, and the Asean bloc," it added.
For 2025, the current account deficit is expected to narrow to $5.8 billion.
Merchandise exports and imports, meanwhile, are expected to rise to $60.4 billion and $134.8 billion for growth rates of 6.0 percent and 7.0 percent.
Forecasts for services exports and imports were also higher at $61.6 billion and $34 billion, respectively, with growth expected to hit 10 percent and 6.0 percent.
Outsourcing earnings remain expected to grow by 7.0 percent for the year and the outlooks for travel receipts and cash remittances of 10 percent and 3.0 percent, respectively, were the same as those for 2024.
The financial account deficit projection for 2025, meanwhile, is that of a lower $4.8 billion, with net FDI expected to slip to $9.0 billion and net FPI at $1.0 billion from a year earlier.
GIR is expected to end 2025 at lower $102 billion.
The revised BoP forecasts, the BSP said, come with limitations given a buildup of external challenges.
"The BSP will continue to monitor closely emerging external sector developments and risks, and how these may impact the BSP's fulfillment of its price and financial stability objectives," the central bank added.
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