January 20, 2018, 5:11 pm
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Posts $662M deficit in Q3

The current account reversed to a surplus of $554 million in the third quarter of 2017 from a deficit of $30 million in the same period last year. 

The current account surplus however, was not adequate to offset the increased net outflows in the financial account, resulting in a deficit in the overall balance of payments position (BOP) in the third quarter. 

The country’s BOP position reversed to a deficit of $662 million in the third quarter, after posting a surplus of $289 million in the second quarter of the year. This quarter’s deficit was also a turnaround from the $1 billion surplus recorded in the third quarter of last year. 

Net outflows in the financial account increased to $855 million following the reversal of the portfolio investment account to net outflows which more than offset the significant improvement in net inflows of direct investments. 

Meanwhile, the current account surplus was spurred by the continued growth in exports of goods, BPO-related transactions and travel services, and personal remittances. 

Global economic conditions continued to pick up pace supported by the sustained expansion in manufacturing activity in the US, China, Japan, as well as in the Euro area, and the Asean region. 

As growth prospects remained broadly optimistic, improved external demand for the country’s exports of goods and services supported the strong performance of the current account during the quarter. 

The current account registered a surplus of $554 million in the third quarter, a reversal from the $30 million deficit recorded in last year. 

This positive outcome resulted mainly from the higher net receipts in the trade-in-services, and primary and secondary income accounts which more than compensated for the widening trade-in-goods deficit.

The trade-in-goods deficit increased to $9.5 billion from $9 billion as imports of goods expanded by $2 billion while exports of goods rose by $1.5 billion. 

Exports of goods expanded by 12.9 percent to $12.8 billion in the third quarter from $11.3 billion. 

Except for petroleum products, all major commodity groups posted increments owing to increased shipments to the country’s major trading partners, such as US, China, Hong Kong SAR, and South Korea, among others. 

Exports of manufactured goods which comprised about 78 percent of total goods exports grew by 11.8 percent, due mainly to increased exports of non-consigned electronics and machinery and transport equipment, which grew by 29.2 percent and 41.8 percent, respectively. 

Imports of goods amounted to $22.2 billion, higher by 9.6 percent than the $20.3 billion recorded last year on account of the rise in imports of raw materials and intermediate goods by 11.1 percent and mineral fuels and lubricants by 31.1 percent.

Net receipts in trade-in-services amounted to $2.8 billion, 33.9 percent higher than the $2.1 billion net receipts due mainly to higher net receipts in other business services by 24.3 percent and to lower net payments in travel services by 5.2 percent. 

The growth in other business services was boosted by technical, trade-related, and other business services, mostly business process outsourcing (BPO) related transactions. 

Export revenues in BPO services totaled $6 billion, or an increase of 11.1 percent from the $5.4 billion receipts. 

Meanwhile, the reduction in net payments of travel services resulted from the marked increase in travel exports by 62.9 percent which outpaced that of travel imports by 24.3 percent.

The primary income account posted net receipts of $714 million, higher than the $532 million net receipts last year. 

The 34.1 percent increment was due largely to the 6.9 percent growth in compensation inflows from resident overseas Filipino (OF) workers amounting to nearly $2 billion during the quarter. 

In addition, net payments of investment income were 4.2 percent lower owing to the reduction in residents’ interest payments on foreign portfolio investments, particularly on bonds held by non-residents. Interest receipts on reserve assets which rose by 16.6 percent, also contributed to the upturn in primary income net receipts.

Net receipts in the secondary income account grew by 3.1 percent to reach $6.6 billion compared to the $6.4 billion net receipts last year. 

The improvement stemmed from the 38.3 percent increment in net receipts of other current transfers along with the 2.4 percent growth in personal transfers to $6.2 billion.

The BOP position for the first nine months of 2017 yielded a deficit of $1.4 billion, a turnaround from the $1.6 billion surplus recorded in the same period in 2016. 

This development stemmed mainly from the reversal of the financial account to net outflows from net inflows a year ago. 

The net outflows in the financial account in the first nine months of 2017 was due to higher net outflows in the portfolio and other investment accounts which more than tempered the increased net inflows of direct investments. 

Meanwhile, the current account reversed to a surplus of $28 million as a result of higher net receipts recorded in the services, secondary income, and primary income accounts.
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