Join +750K new investors every month who copy stock picks from billionaire's portfoliosSign Up Free

UPDATE 1-Philippine current account gap to widen in 2019 on weak exports

Published 06/14/2019, 05:25 PM
Updated 06/14/2019, 05:30 PM
© Reuters.  UPDATE 1-Philippine current account gap to widen in 2019 on weak exports
USD/PHP
-

* Current account deficit seen at 2.8 pct of GDP in 2019
* BOP position to revert to surplus of $3.7 bln in 2019
* Wider c/a deficit due to weak exports growth

(Adds details, quotes, background)
MANILA, June 14 (Reuters) - The Philippines is expected to
end the year with a wider current account deficit, the central
bank said on Friday, as the outlook for exports deteriorated due
to weaker global demand.
This year's current account deficit will likely reach $10.1
billion, or 2.8 percent of gross domestic product, the central
bank said, wider than an earlier forecast of an $8.4 billion gap
and greater than last year's $7.9 billion deficit.
But strong foreign portfolio inflows and foreign direct
investments will strengthen the country's balance of payments
(BOP) position. The central bank forecast a surplus of $3.7
billion this year from a previous estimate of a $3.5 billion
deficit.
Imports were seen growing 7.0% in 2019. While slower than an
earlier estimate of 9.0%, it would still outpace the downwardly
revised growth forecast of 2.0% for exports, the central bank
said.
"We are seeing weaker economic activity and that's pushing
down the global demand for exports," said Dennis Lapid, central
bank director for economic research.
The Philippines has recorded large trade gaps since last
year, widening its current account deficit and adding pressure
on the peso PHP= , which weakened to 52.02 to the dollar after
the central bank projected a wider deficit.
Michael Ricafort, economist at Rizal Commercial Banking
Corp, said the improvement in the country's BOP's position - a
reflection of sustained foreign exchange inflows - should
provide greater support for the currency.
Central bank Deputy Governor Diwa Guinigundo said trade
deficits were to be expected as the government continues to
spend more on infrastructure meant to support growth and
strengthen the economy's buffers against global economic
uncertainties.
"Precisely because we continue to spend more and more on
infrastructure...we should be able to build a critical mass of
capacity for exports and more stable imports so that the current
account will be more or less stable at below 3 percent,"
Guinigundo said.
The central bank has started to unwind some of its policy
tightening last year when it cut its benchmark interest rate
PHCBIR=ECI by 25 basis points in May and announced a
three-step reduction in banks' reserve requirement ratio to
boost growth.

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.