The Bangko Sentral ng Pilipinas (BSP) remains confident that the balance of payments (BOP), reflecting the country’s transactions with the rest of the world, will still yield a surplus this year amid the foreseen tides in global monetary policy and growth.
Randell Tiongson, who writes on financial matters, quoted BSP Deputy Governor for the Monetary Stability Sector Diwa C. Guinigundo as saying that the BSP has high hopes on the country’s external sector.
“On the external front, I see our initial forecast of sustained external payments
surplus continuing to be broadly appropriate. The balance of payments should be able to bounce back strongly from a shortfall in 2014 to a surplus in 2015, with the current account expected to show increasing positive position of at least $6 billion,” Guinigundo said.
The BSP earlier reported that the BOP stood as a deficit of $2.88 billion in 2014. This was a steep reversal from the previous year’s BOP, which was a surplus totaling $5.085 billion.
The BOP deficit last year was attributed by the central bank to capital outflows seen earlier during the year, when markets fidgeted over plans by the US Federal Reserve of ending its trillion-dollar quantitative easing program.
Despite the expected rise in US interest rates this year following the conclusion of its bond-buying program, Guinigundo said the forecast BOP surplus of $1 billion for the year remains valid.
“These are premised on, one, recovery in the global economy, but at an uneven pace. This dimension is important, because unevenness should lead to divergent monetary policies. The US is turning the corner, so I expect it to start preparing the stage for some tightening, which could result in some capital outflows in the Philippines,” Guinigundo said.
“Europe and Japan remain soft, so monetary policy is needed to be accommodative, which could drive some capital to flow to emerging markets, including the Philippines,” he added.
No matter the optimism, Guinigundo said the Philippines—particularly the BSP—must remain vigilant, as there are a lot of moving parts in the global economy that can affect the country within the course of the year.