MANILA – Bangko Sentral ng Pilipinas (BSP) Governor Nestor A. Espenilla Jr. expects the deficit on the country’s current account to continue as the domestic economy posts robust growth.
During the Senate hearing for the proposed 2018 national budget on Wednesday, the central bank chief said higher importation of capital goods and raw materials were the main culprit in the reversal of the current account surpluses for more than a decade to deficit.
As of last June, exports rose by 0.8 percent, a turnaround from the 9.2 percent decline same period last year. This growth is lower than month-ago’s 14 percent rise.
Imports during the same month, meanwhile, fell 2.5 percent from a growth of 21.9 percent in June 2016. Last May, imports grew by 16.6 percent.
“This broad-based import mix reflects sustained expansion in the domestic economy,” Espenilla said.
As of end-March this year, the country’s current account registered a deficit of USD318 million, equivalent to 0.4 percent of gross domestic product (GDP).
The country ended 2016 with a USD601 million current account surplus, which was about 0.2 percent of GDP. It was lower than year-ago’s USD7.3 billion , primarily due to higher importation.
Espenilla, pointed out, that “it should be emphasized that the current account position signals the country’s higher propensity to import as the country gears up for higher growth momentum.”
“The Philippines is one of the fastest-growing economies in the region, arguing for higher imports to support the projected higher growth path,” he added. PNA