By Elijah Joseph C. Tubayan, Reporter
THE PHILIPPINE’s current account swung to a surplus in the second quarter, lifted by dollar inflows mainly from business process outsourcing (BPO) services that softened the blow from a still yawning trade deficit, the Bangko Sentral ng Pilipinas (BSP) said on Friday.
The current account – an indicator of the economy’s health that has for its components the balance of trade (exports and imports), net income from abroad and net current transfers – recorded a $15 million surplus in the three months ended June from $1.3 billion deficit seen during the same period in 2016.
A current account surplus indicates that the country is a net lender to the rest of the world.
The second quarter boost came from net income from abroad or the trade-in-services, not from exports even as “exports seem to have started recovering,” BSP Deputy Governor Diwa C. Guinigundo told a media briefing on Friday at the BSP complex.
BPO services brought in revenues of $5.5 billion in the second quarter, up by an annual 7%, the BSP said in its quarterly report. That, together with “higher net receipts in technical, trade-related, and other business services, and computer services,” helped bring in dollar inflows of $2.3 billion in the second quarter, a 69% increase from year-ago’s $1.3 billion.
The trade balance normally should have been more telling of where the current account is headed – and with exports rising an annual 17.6% in the second quarter, while imports similarly expanding by 10.3% during the period, the bet would have been for a current account surplus. But the Philippines still recorded a trade deficit in the second quarter, at a wider $9.7 billion from $95. billion during the same period a year ago.
“We still feel the impact on the current account because the base of imports is much higher compared to the base of exports,” said Mr. Guinigundo.
With that major determinant of current account wobbling, the second quarter surfeit was not enough to bring the first-half result to a surplus. The current account deficit was $234 million in the first semester, shrinking from the $424 million shortfall recorded in the same six months last year.
Sought for comment, Ruben Carlo O. Asuncion, chief economist at Union Bank of the Philippines, said the depreciation of the peso – which is currently trading above P51 per dollar levels – contributed to a pale current account picture.
“I see the weak peso at play in these two major macroeconomic variables. Exports have been growing in the last months because it has become more competitive due mainly to the peso’s weakness,” he said in an email.
“The continuing expansion of advanced economies also drove demand for our exports. This resulted somehow to the slight surplus in the current account in 2Q. Overall, this largely supports my view that the economy is not overheating as opposed to other prevailing views,” he added
The central bank expects the country’s overall external payments position to remain in deficit for a second straight year at a $500-million gap. The balance of payments position in the six months ended June so far yielded a deficit of $706 million.
Mr. Guinigundo said that the target remains “doable.”
Angelo B. Taningco, economist at Security Bank Corp., meanwhile said that imports of capital equipment would pick up.
“I expect it to rebound in upcoming months especially when construction of new infrastructure projects would commence,” he said in an email.