THE Bangko Sentral ng Pilipinas (BSP) said it estimates that the balance of payments in May continued to reflect a surplus, of about $3.7 billion, continuing the turnaround from a deficit of $3.5 billion as recently as November.

It added that the May estimate for BoP heralds an improvement in the domestic economy in the second half of the year.

The May estimate represents a slight retreat from the nearly $3.8 billion surplus in the first quarter.

“The development in the balance of payments in the first quarter (is) to some extent… also carried over to the balance of payments projection for 2019 and 2020. (The projections) actually capture the implications of a growing economy like the Philippines. We have shown in many instances, in many cases, that the Philippine economy is one of the fastest-growing economy despite a 5.6% (GDP) performance in the first quarter,” Deputy Governor Diwa C. Guinigundo said in a briefing on Friday.

The BSP expects a current account deficit of $10.1 billion in 2019, revising its projection of $8.1 billion made in November. The new projection is equivalent to 2.8% of Gross Domestic Product (GDP).

Mr. Guiningundo said the Philippine economy is benefiting from remittances of Overseas Filipino Workers (OFWs), and receipts from business process outsourcing (BPO) companies and tourist arrivals, which are helping fund the current account deficit. The current account measures the gap between inflows and “current” outbound payments, or those which are due within a year.

“We see the financiability of the current account deficit. We will continue to grow, we will continue to incur a merchandise trade deficit, and therefore the current account will continue to be in a shortfall position. But the inflows of foreign investment, foreign direct investment and even kinds of other investments (will continue),” Mr. Guingundo said.

According to BSP data, the BoP in the first quarter was in surplus by $3.8 billion, a reversal of the $1.2 billion deficit recorded in the same quarter last year due to higher net inflows in the financial account, mainly on reversal of portfolio investments to net inflows and increased net inflows in other investments and direct investment accounts.

The country’s account recorded a deficit of $1.2 billion in the first quarter of 2019, higher by 258% from the $335 million deficit in the first quarter of 2018.

“The strong performance of the financial account during the quarter was bolstered by favorable investor sentiment attributed to the country’s solid macroeconomic fundamentals and firm economic growth prospects,” BSP Department of Economic Statistics Director Redentor Paolo M. Alegre, Jr. said.

The deficit in the trade-in-goods account widened to $12.4 billion in the first quarter from $10.6 billion a year earlier as imports grew 7.6% while exports fell 0.8%.

“The continued growth in imports of goods was boosted by increased purchases of capital goods, consumer goods and raw materials and intermediate goods,” Mr. Alegre said.

Dennis D. Lapid, the central bank’s Director for the Department of Economic Research, said the outlook for the overall global economy declined this year due to external uncertainties such as the trade disputes between the United States and China, and the disruption caused by the United Kingdom’s pending exit from the European Union.

“There’s been a reduction in the overall growth outlook for the global economy… As of April 2019, the global GDP (gross domestic product) is now expected to grow at 3.3% compared with 2.7% in November,” Mr. Lapid said.

“[In] global oil markets and other non-oil commodity markets, there’s the expectation of weaker demand in going forward and that’s going to push down commodity prices,” Mr. Lapid said.

“We’re seeing weaker global economic activity and that’s pushing down demand for exports,” he added. — Reicelene Joy N. Ignacio