Bangko Sentral ng Pilipinas (BSP) has slashed the balance-of-payment (BOP) surplus target for 2016 to $500 Million from earlier assumption of $2 billion because of the lower global growth outlook and uncertainty in the US Federal Reserve policy tightening.
The Balance of Payment of a country displays the transaction with world. Components comprises of trade, portfolio investments, and foreign direct and involved remittances from Filipino abroad. A surplus means more money went into the economy, while a deficit means otherwise.
BSP in May projected $2-billion BOP surplus as of yearend as the double-digit growth in imports to date surpass an expected drop in end this year’s exports, which would pull the current account lower to $2.5 billion, down from last projection of $5.8 billion.
BSP predicts imports growth by 11% and export drop by 3% by year end.
Diwa Guinigundo, the BSP Deputy Governor for Monetary Stability Sector said –
“I think we need to emphasize that 2016, especially in the last quarter of the year, has been particularly challenging. There was a lot of unexpected developments in the market, most of which are anticipated but not in terms of the timing as well as the magnitude of those adjustments,”
Guinigundo noted that business process outsourcing were offering support to weak merchandise exports.
The bank also said the FDI inflows would perk up to $6.7 billion instead of $6.3 billion in 2016, while foreign portfolio investments is expected to book a net outflow of $1.1 billion.