The Philippines expects wider balance-of-payments gap, lower reserves
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THE Philippine central bank forecast a wider shortfall in the country’s balance-of-payments (BOP) coverage in the current year and the next, reflecting a drop in foreign currency reserves and a larger trade deficit.
Bangko Sentral ng Pilipinas (BSP) predicted a deficit of US$11.2 billion in BOP this year. The previous estimated gap was US$8.4 billion. The nation is expected to end 2022 with US$93 billion of foreign exchange reserves, down from US$99 billion seen earlier.
The BSP was among South-east Asian central banks forced to draw down reserves in recent months to support their currencies amid broad US dollar strength. The pressure has eased over the last few weeks, with the US Federal Reserve nearing the end of its monetary-tightening cycle and China gradually reopening.
The Philippine peso gained about 6 per cent against the US dollar this quarter, paring its year-to-date decline to about 8 per cent.
Dennis Lapid, officer-in-charge at the BSP’s economic research department, said on Friday (Dec 9) that “persistent external risks continue to weigh on the BOP outlook”. These include more subdued global growth prospects. He added that improving consumer sentiment and continued lending activity were among domestic sources of resilience.
While economic managers have tempered the nation’s economic growth outlook for the next year, the Philippines is still expected to post some of the strongest expansions in Asia.
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Lapid said that the BSP would continue monitoring emerging external developments and risks. The central bank expected the growth in imports to outpace exports, leading to a widening in the current account, which is the broadest measure of trade in goods and services. BLOOMBERG
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