The country’s balance of payments (BOP), or the sum of the Philippines’s trade transactions with the rest of the world, fell into the deficit territory at the end of 2016, missing the projection for the year and reversing gains seen in 2015.
The Bangko Sentral ng Pilipinas (BSP) reported on Thursday the country’s BOP hit a deficit of $420 million at the end of 2016, after incurring a deficit last December for the third consecutive month.
The country’s end-2016 BOP position showed a steep contrast from the $2.616-billion surplus posted in 2015. It is down from the $500-million surplus projection of the government, a projection that was already lower than an earlier estimate of $2-billion surplus for the year.
The December shortage of $214 million added to the overall BOP deficit at the end of the year, with the entire fourth quarter registering monthly deficits.
The largest monthly deficit seen in the country’s 2016 BOP record was last November, when it hit $1.67 billion.
November was the month of global financial-market volatility, when the confluence of US President-elect Donald J. Trump’s victory and uncertain policies, and the concerns on the timing of the US Federal Reserve interest-rate hike, plus the political noise coming from President Duterte rattled investors to bring the peso to new record lows.
Bank of the Philippine Islands lead economist Emilio Neri said deficit last December likely emanated from the wider trade deficit during the period, combined with portfolio outflows from both the local equity and bond markets.
Neri expressed optimism for this year, saying January portfolio flows may revert to slight positive capital account and BOP surpluses, as global fund managers tend to carry out a slight rebalancing of their portfolios in a new calendar year.