THE BALANCE of payments (BoP) position of the Philippines — which shows its economic transactions with the world for a particular period — reverted to a surplus in the third quarter, on the back of increased net inflows in the financial account paired with a lower deficit in its current account.

Moreover, the central bank also expects a wider trade gap as the BoP surplus is seen to widen for 2019 and 2020.

A report released by the Bangko Sentral ng Pilipinas (BSP) on Friday showed the country’s BoP position in the third quarter stood at a surplus of $778 million, a reversal of the $1.9-billion deficit logged in the same period a year ago.

“This developed as a result mainly of the increased net inflows (i.e., net borrowing by residents from the rest of the world) in the financial account and the decreased deficit in the current account,” the central bank said.

According to the report, the country’s current account reversed to a surplus of $654 million in the third quarter from the $2.081-billion deficit a year ago.

The BSP said this was backed by the lower deficit in the trade in goods account.

The same period saw capital account’s net receipts increasing by 11.6% to $17 million from $15 million in the third quarter of 2018.

“Higher net receipts of trade in services and primary and secondary income also contributed to the rebound of the current account in the third quarter of the year,” the central bank said.

Meanwhile, in the financial account, net borrowings of residents with the rest of the world were more than halved (down 52.89%) to $848 million from $1.8 billion a year ago. Portfolio investments turned around to a net inflow of $895 million from $224 million worth of outflows in the third quarter of 2018.

“The decline in net inflows during the period was due primarily to the significant drop in net inflows in the direct investment account and the reversal to net outflows in the portfolio investment account, which tempered the expansion in net inflows in the other investments account,” the BSP said.

For the first nine months of 2019, the country’s BoP position stood at a surplus of $5.567 billion, reversing from the $5.136-billion deficit in the January to September period of 2018.

The current account stood at a deficit of $992 million, narrowing by 83% from the $5.837-billion gap in the comparable year-ago period.

Meanwhile, the capital account’s net receipts in the January to September period jumped 19% year-on-year to $49 million from $44 million.

On the other hand, the financial account slightly widened to a net inflow of $4.456 billion from $4.4328 billion in the first nine months of 2018.

UnionBank of the Philippines, Inc. Chief Economist Ruben Carlo O. Asuncion said the latest BoP developments are “good, but not necessarily reflective of what government initially planned for this year”.

“The narrower trade in goods and services was a result of the delayed budget and continuing weak external trade conditions,” he said in a text message.

The economist noted there are “controllable” and “uncontrollable aspects” that could impact the BoP data for the last quarter of the year.

Among the controllable aspects, according to Mr. Asuncion, is the passage of the budget on time, while those that are uncontrollable would be uncertainties rooted from the lingering US-China trade wars.

“Overall, the BoP surplus may not be entirely seen as complete positive by looking into the details and see a missed chance to do better. However, the succeeding quarters may offer better prospects as government execution improves,” he added.

The BSP revised its BoP target for 2019 to a surplus of $4.8 billion from the $3.7-billion surplus it projected in May. If realized, it would be a turnaround from the $2.306-billion deficit seen in 2018.

For 2020, the BSP expects the country’s BoP position to hit a surplus of $3 billion. — Luz Wendy T. Noble

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