BSP: BoP surplus remains despite risks

The Bangko Sentral ng Pilipinas (BSP) projects a sustained surplus from all the country’s international financial transactions or balance of payments (BoP) this year due to continuous inflows of foreign capital, which could offset losses in trade income.

In an outlook report on Friday, BSP said it expects a slightly higher BOP surplus of $2.1 billion or 0.4 percent of gross domestic product (GDP). The central bank arrived at this figure during a meeting in the last quarter of 2024.

The new outlook is higher than the $1.7 billion or 0.3 percent of GDP the BSP projected during its meeting in the third quarter last year.

“Sustained net inflows from the financial account will continue to buoy the overall BoP outlook this year. Nevertheless, US-related uncertainty, specifically linked to possible policy shifts in the US trade, investment, and migration policies, will remain a key downside risk to the 2025 external sector outlook,” BSP said.

BOP consists of foreign investments through bonds and stocks, income and payments from trade activities, remittances, transfers of non-financial assets and foreign currency deposits.

BSP sees the global economy growing moderately this year, which it said signals a Philippine economic growth that will settle closer to the lower end of the government’s outlook range of 6 to 8 percent.

“Economic activity will be supported by strengthening domestic demand boosted by easing inflation, lower oil prices, and timely enactment of the national budget,” BSP said.

The central bank added government spending on infrastructure and policy reforms for the business community will further help expand the economy.

As of September 2024, BSP said BOP surplus stood at $5.1 billion, up from $1.7 billion surplus in the same period in the prior year due to higher foreign investments in the debt market.

The growth was posted amid a still high BSP benchmark for interest rates at 6.25 percent and falling inflation rates toward 1.9 percent in September, the lowest in four years based on data from the Philippine Statistics Authority.