The Monetary Board (MB) of the Bangko Sentral ng Pilipinas (BSP) on Thursday announced new projections for the current account deficit and the balance of payments (BOP) this year, taking into account "key developments" in the first four months of the year such as the global economic slowdown due to the COVID pandemic.
In a mobile message, BSP Governor Benjamin Diokno said the overall BOP position is now projected to be 0.2% of the gross domestic product (GDP) for 2020, equivalent to $600 million. This is lower than the earlier forecast of 0.7% in November 2019, equivalent to $2.9 billion.
The current account to GDP was also revised to a deficit of $1.9 billion, equivalent to -0.5% of the GDP. This is smaller than the $8.4-billion deficit or -2.1% of GDP forecasted in November last year.
For 2021, the BOP position is seen to grow to 0.6% of GDP or $2.4 billion, while the current account is expected at a deficit of $4.4 billion or -1.1% of the GDP.
"The reassessment incorporates key developments during the first four months of 2020 and 2021 BOP outlook since it was approved by the MB on 11 Dec 2019," said Diokno.
"These include expectation of sharp contraction in both global and domestic economic activities in 2020, followed by a strong recovery in 2021; a shift toward increased monetary policy accommodation among central banks worldwide; and continued trade and political tensions, among others," he added.
Earlier this week, the World Bank said it expects the Philippine economy to contract by 1.9% this year, following the 6.0% growth last year.
In terms of cash remittances, the BSP said a 5% contraction is expected this year to $28.6 billion, while a 4.0% growth is seen in 2021 to $29.8 billion.
"This is due mainly to large repatriation of workers and major economic disruptions in host countries," said Diokno.
Earlier data from the BSP showed that personal remittances the sum of transfers sent in cash or in-kind via informal channels -- recorded a record-high $33.467 billion in 2019. Meanwhile, cash remittances -- money transfers coursed through banks -- rose 4.1% to $30.133 billion.
The Monetary Board also lowered its 2020 foreign direct investments (FDI) projection to $4.1 billion from the earlier announced $8.8 billion. For 2021, FDIs are seen at $6.5 billion.
The BSP also announced a lower projection for BPO receipts this year at 2.0% of the GDP versus the 5.0% projection announced in November. —LDF, GMA News