Higher inflows boost BoP components as of September

Business World

THE COUNTRY recorded a higher current account surplus in the nine months to September, the Bangko Sentral ng Pilipinas (BSP) said on Thursday.

In a press briefing, Rosabel B. Guerrero, director of BSP’s economics department, said that the current account surplus as of September totaled $7 billion, up from the $6.2-billion surfeit in the same period last year.

"The 13% growth was traced to higher net current transfers and services receipts, combined with a lower deficit in trade in goods, which more than compensated for the increase in net income payments," she said.

Current account is a component of the country’s balance of payments (BoP) position. The current account covers transactions such as exports, imports, trade in services, remittances from Filipinos overseas and profit of Philippine investments abroad.

Ms. Guerrero added that the capital and financial account, the other component of the BoP, yielded $1 billion in net inflows in the first three quarters of the year, a reversal from the $1.7-billion net outflows in the same period a year ago. The capital and financial account consists of capital transfers, direct investments, portfolio and other forms of investments.

"The investment climate improved, given the country’s higher-than-expected second-quarter GDP growth and reports of improved corporate earnings in the first semester," she said.

The country’s BoP surplus totaled $13.178 billion in the 11 months to November, breaching the $8.2-billion forecast of the central bank for the year.

BoP refers to the summary of the economic transactions of the country such as the trade in goods, services and income as well as direct investments, portfolio investments and other investments with the rest of the world for a specific period.

A higher surplus means more foreign currency entered the country, indicating an improved ability of the country to repay its external obligations. -- LDD