THE Philippine economy was in a deficit of more than a billion dollars in its transactions with the rest of the world for the second consecutive month in June, owing largely to the National Government’s payment of foreign debt.
Latest data from the Bangko Sentral ng Pilipinas (BSP) showed that the country’s Balance of Payments (BOP)—or the summary of the local economy’s transactions with the global economy—hit a deficit of $1.57 billion in June this year.
This is the second consecutive month that the BOP deficit has breached the $1-billion mark. In May, the country’s deficit was at $1.61 billion. June’s deficit is also significantly higher than the $312-million BOP deficit in the same month in 2021.
The BOP is usually considered as an important economic indicator in an economy as it shows the level of earnings or expenses of the Philippines with its transactions with the world. A deficit means that the country had more dollar expenditures than its dollar earnings during a given period.
“The BOP deficit in June 2022 reflected outflows arising mainly from the National Government’s payments of its foreign currency debt obligations,” the BSP said.
The BOP deficit in June brought the cumulative BOP level for the first half of the year 2022 to a $3.1-billion deficit, higher than the $1.9-billion deficit recorded in the same period a year ago.
Last month, the BSP announced that the projection for the country’s overall BOP position for 2022 is a deficit of $6.3 billion, revised from the previous forecast of a $4.3 billion deficit.
Rizal Commercial Banking Corp. (RCBC) chief economist Michael Ricafort said for the coming months, the country’s BOP could still be affected by the continued Russian invasion in Ukraine, as it is expected to elevate the prices of importation and lead to higher trade deficits and affect the peso.
Regional think tank AMRO (ASEAN +3 Macroeconomic Research Office), which released its annual assessment of the Philippines on Wednesday, also said the country’s external account could face some pressure in 2022 as the external environment has become more unfavorable.