BSP sees wider current account deficit for the country in 2020

December 16, 2019 - 9:08 AM
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BSP building
Facade of the Bangko Sentral ng Pilipinas in Manila. (BSP/Released)

MANILA — Bangko Sentral ng Pilipinas said the country’s current account deficit will widen next year, with the trade gap broadening as the government imports goods for an overhaul of infrastructure under President Rodrigo Duterte.

The current account deficit next year is projected at $8.4 billion, or 2.1% of gross domestic product, versus an expected $5.6 billion, in 2019, Dennis Lapid, director of the central bank’s economic research department, told a news conference.

Exports, weighed down by U.S.-China trade tensions, are likely to pick up by 4% next year from 1% growth this year, but imports growth will accelerate faster, at 8% in 2020 from 2% in 2019, central bank data showed.

Imports growth is underpinned by the inbound shipment of goods and capital equipment, Lapid said.

The current account, which measures, among other things, trade-in-goods, has been in deficit since 2017. But it should be amply covered by receipts from remittances and business process outsourcing sector, the central bank said.

Cash remittances from Filipinos working and living abroad are likely to grow 3% this year and next year, the central bank said.

The balance of payments is seen posting a surplus of $3 billion next year from $4.8 billion in 2019, while gross international reserves could end 2020 at $86 billion from $85 billion at the end of 2019.

Reporting by Neil Jerome Morales; Editing by Muralikumar Anantharaman