PH balance of payments reverts to surplus in June

REVERSAL. Balance of payments hit a surplus in June at $485 million, bringing the countryu2019s BOP surplus to $1.68 billion in the first 6 months of the year. File photo from Agence France-Presse

REVERSAL. Balance of payments hit a surplus in June at $485 million, bringing the countryu2019s BOP surplus to $1.68 billion in the first 6 months of the year.

File photo from Agence France-Presse

MANILA, Philippines – The country’s balance of payments (BOP), or the transactions with the rest of the world for a period, reverted back to a surplus in June, the Bangko Sentral ng Pilipinas (BSP) reported Monday, July 20.

The BSP said the country booked a BOP surplus of $485 million in June, reversing a $24-million deficit registered in the same month last year.

This brought the country’s BOP surplus to $1.68 billion in the first 6 months of the year, from a deficit of $4.14 billion in the same period in 2014. (READ: PH's balance of payments in May swings to deficit)

Strong inflows coming from foreign currency deposits of the government and income from the BSP’s investments abroad resulted in the strong surplus for the last month.

The BOP shows a summary of a country’s transactions with the rest of the world. Components include trade, foreign direct and portfolio investments, and even remittances from Filipinos abroad. A surplus means more money went into the economy.

The BOP posted a deficit in 2014 after 9 consecutive years of being in surplus. Central bank data showed a BOP deficit of $2.87 billion for 2014, a turnaround from the $5.085-billion surplus in 2013.

The deficit was blamed on the normalization of policy in the United States, especially as this resulted in a reallocation of assets among markets and economies.

In January 2014, The US Federal Reserve started reducing its massive monthly purchases, ending the stimulus in October.

In May this year, the BSP revised upwards its BOP forecast to a surplus of $2 billion instead of the earlier projected surplus of $1 billion. It also raised the country’s current account surplus forecast to $14.2 billion instead of previous estimate of $6.8 billion. (READ: BSP revises BOP 2015 forecast to $2 billion)

The current account tracks the country’s external trade in goods and services, as well as income transfers and payments.

Net inflows of foreign direct investments was also raised by BSP to $6 billion from $5.3 billion and the foreign portfolio investments or hot money to $1.4 billion instead of $1.3 billion.

The country’s central bank is also projecting a faster 5% increase in exports instead of 4% while imports is projected a lower 1%  increase instead of 7% due to lower oil prices. – Rappler.com