THE PHILIPPINES’ external payments position slipped in June to the biggest deficit in seven months, due to a sustained pickup in imports and stronger corporate demand for dollars, the central bank said yesterday.

The country’s balance of payments (BoP) position widened nearly tenfold to a $569-million deficit last month from May’s $59-million shortfall, reversing a $418-million surplus posted in June 2016, according to the Bangko Sentral ng Pilipinas (BSP).

The BoP measures the country’s transactions with the rest of the world in a specific period. A deficit means more funds fled the economy against what entered, while a surplus would show that more money came in.

The latest month’s figure is also the biggest since a peak $1.671-billion deficit logged in November last year, and brought the first-half tally to a $706-million deficit. This compares to a $634-million surplus recorded in 2016’s first six months.

BSP Deputy Governor Diwa C. Guinigundo said bigger demand for dollars among companies, coupled with the government’s foreign debt payments and a persistent trade gap likely drove the BoP further into deficit.

“Although trade data are not yet available for June, we surmise that while exports continued to recover, the expanding economy pushed imports higher particularly of capital goods and raw materials,” Mr. Guinigundo told reporters in a mobile phone message yesterday.

“This contributed to the recent downtrend of the peso against the US dollar even as the overall macroeconomic fundamentals remain robust.”

The peso hovered around the P49 level versus the dollar in the first few weeks of the month, before breaking through the P50 mark on June 20 and staying there since then.

On the other hand, Mr. Guinigundo said the government’s dollar deposits and income derived from the central bank’s offshore investments helped temper the impact of outbound money flows.

June saw higher interest rates in the United States after the Federal Reserve introduced a fresh rate hike during its policy review, the second for the year and on track with the central bank’s plans of rate normalization.

Foreign portfolio investments posted a $79.56-million net inflow last month, recovering from May’s $24.35-million net outflow. This pulled the six-month tally to a $460.83-million net outflow, according to latest available central bank data.

The BSP expects the country’s BoP to log a $500-million deficit this 2017, equivalent to 0.2% of gross domestic product (GDP).

If realized, this will be slightly wider than the $420-million shortfall logged in 2016 at 0.1% of GDP.

BSP Governor Nestor A. Espenilla, Jr. has said that the country’s external position remains “very manageable,” with the increased imports of capital goods simply supporting the growing economy.

He added that steady inflows from worker remittances, which drive household consumption that contributes about 70% of gross domestic product, and business process outsourcing sales continue to support robust economic growth. — Melissa Luz T. Lopez

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