PHL current account surplus surges in Q2

The Philippine current account surplus widened on higher remittances and robust revenues from the business process outsourcing sector in the second quarter, Bangko Sentral ng Pilipinas said Friday. 

 

A component of the balance of payments position, which measures Philippine transactions with the rest of the world, the current account is expected to register a wider surplus in the fourth quarter as speculative money heads back to emerging markets after the  US Federal Reserve kept its bond-buying program intact.

 

At a press briefing, Rosabel Guerrero, Bangko Sentral Economic Statistics director, said the current account recorded a $2.5 billion surplus in April to June, or 9.1 percent wider year-on-year. 

 

“The current account surplus improved mainly on account of increased net receipts in secondary income and services account,” she said. 

The latest figure placed the first half surplus at 5.6 billion – below the $7-billion central bank's  projection. 

 

Bangko Sentral noted that receipts from secondary income account were mainly personal transfers of overseas Filipinos that increased by 4.8 percent annually in the second quarter. 

 

Diwa Guingundo, Bangko Sentral deputy governor, said the wider surplus buoyed the balance of payments (BOP) position despite volatility in financial markets caused by previous uncertainty over the magnitude and schedule of the scale back the Fed was planning for its economic stimulus program.

 

“Through all of those volatile movements, the BOP was in surplus due the strong current account, which speaks of the ability of the Philippines to market its product and itself,” he said at the same briefing. 

 

On the impact the Fed decision to keep its stimulus package intact, Guinigundo said outflows – particularly in speculative portfolio money – may be seen in the third quarter amid lingering uncertainty over the fate of the Fed program. 

 

Strong remittance flows and reversal of speculative investments back to the Philippines may follow in the fourth quarter after the Fed kept its program untouched on Thursday. 

 

“The market uncertainties that we saw in the second quarter will continue in the third quarter,” Guinigundo said, but noted a likely inflow of portfolio money as fund managers “rethink their portfolio placements.”

 

On Thursday, PHL time, the Fed announced it won’t scale back its $85-billion bond-buying stimulus to keep the momentum of US economic recovery in check, a move that surprised markets around the world. – VS, GMA News