THE Philippine economy ended 2018 with a balance of payments (BOP) deficit that was nearly three times what it incurred at the end of 2017, the Bangko Sentral ng Pilipinas (BSP) reported on Friday, citing the huge trade gap as a key factor.
Data from the Central Bank showed that the country’s BOP — or the summary of the country’s transactions with the rest of the world — ended 2018 with $2.306 billion in deficit.
This compares with the end-2017 deficit of $863 million.
The BSP blamed the higher trade deficit for the decline of the BOP’s performance for the year.
“The higher cumulative BOP deficit for the period may be attributed partly to the widening merchandise trade deficit (based on the Philippine Statistics Authority’s preliminary data) for the first eleven months of the year,” The BSP said in a statement.
According to the Central Bank, the higher trade deficit was brought about by the sustained rise in imports of raw materials and intermediate goods as well as capital goods to support domestic economic expansion.
Despite the multibillion-dollar deficit of the country’s BOP position, the shortfall is still smaller than what the BSP had announced in December as the expected BOP gap: $5.5 billion.
This came as the December BOP registered a strong surplus at $2.442 billion, higher than the $917 billion in the previous year. It is also the highest monthly surplus for the year.
“Inflows in December 2018 stemmed mainly from the BSP’s foreign exchange operations. National Government’s (NG) net foreign currency deposits, and BSP’s income from its investments abroad during the month,” the BSP said.
“These were partially offset, however, by the payments made by the NG for its foreign exchange obligations during the month in review,” it added.
Image credits: Nonoy Lacza