The Philippine central bank said on Friday it expects the country’s current account (C/A)  balance to register wider deficits in 2022 and 2023 than previously projected, taking into account the challenges facing the global economy.

The Bangko Sentral ng Pilipinas (BSP) has revised its balance of payments (BoP) projections, with the current account deficit now seen hitting $19.1 billion, or 4.6% of the gross domestic product in 2022.

That compares with the March forecast of a $16.3 billion deficit for this year, or 3.8% of gross domestic product (GDP). 

The BSP said in a statement the revisions to BOP projections took into account the build-up in external risks, ongoing global monetary policy tightening and lingering coronavirus disease 2019 (COVID-19) challenges.

In particular, the BSP cited the downgraded global growth outlook amid the Ukraine-Russia conflict and its impact on commodity prices, the slowdown in China, and the effect on capital flows on central bank policy tightening.

For 2023, the current account deficit is expected to reach $20.5 billion, or 4.4% of GDP, wider than the previous projection of $17.1 billion, or 3.7% of GDP.

With the wider current-account deficit forecast for 2022, the Philippines’ BoP is expected to yield a deficit of $6.3 billion this year (1.5% of GDP) versus the March projection of $4.3 billion (1.0% of GDP).

The BoP deficit forecast for 2023 has been kept at $2.6 billion (0.6% of GDP).

Money sent by Filipinos abroad, a crucial financial flow supporting the Philippine economy, is still projected to increase 4% this year and in 2023, the BSP said, citing base effects that are expected to fade and the recovery of partner economies to pre-pandemic levels. 

The country’s gross international reserves, however, are forecast to hit $105 billion by end-2022 and $106 billion by end-2023, lower than the March projections of $108 billion and $109 billion, respectively. — Reuters