Philippine apex bank revises 2023 projection

The Bangko Sentral ng Pilipinas (BSP) expects a current account deficit of $17.1 billion for 2023, equivalent to 4% of the country’s gross domestic product (GDP), due to subdued global and domestic economic activity. However, this figure is narrower than its earlier estimate of a $19.9 billion deficit, or 4.7% of GDP. The central bank also revised its projection for the 2023 balance of payments deficit to $1.6 billion or 0.4% of GDP, from the earlier estimate of $5.4 billion or 1.3% of GDP.

For 2024, the BSP projected a current account deficit of $16.8 billion, which is 3.4% of GDP, while the balance of payments is expected to have a deficit of $0.5 billion, which is equivalent to 0.1% of GDP. The remittances are also expected to increase by 3% this year and next.

According to the BSP, the projected decline in the current account deficit is primarily due to a decrease in merchandise imports, primarily those of oil and capital goods, as well as the continued growth in remittance inflows. The central bank also anticipates a further pickup in gross international reserves, which are expected to reach $100 billion this year, up from a prior forecast of $93 billion, and $102 billion at the end of 2024.

The BSP is presently working on a program to increase the competitiveness of the country’s manufacturing industry, as well as reforms to the agriculture and services sectors, to address long-term growth constraints. Additionally, the central bank is expected to remain vigilant about the possible economic risks and to be prepared to implement policy measures as necessary.