Philippines: Feb BoP deficit widest in 4 months

THE Philippines’ balance of payments position yielded a $436 million deficit in February, its widest deficit in four months, central bank data released on Monday showed.

The payments deficit expanded from a $251 million gap a year earlier and a $9 million shortfall in January.
The February deficit was the widest since November 2016, when the payments position registered a $1.67 billion shortfall.

The February deficit also brought the two-month 2017 tally to a $445 million shortfall, narrower than the $1.06 billion payments gap in the first two months of 2016.

Bangko Sentral ng Pilipinas (BSP) Deputy Governor Diwa Guinigundo traced growth in the BoP deficit to the foreign debt servicing by the national government and the central bank’s foreign exchange operations.“During the month, foreign portfolio investments actually showed net outflows [from the country]on account of the lingering uncertainty surrounding the US Fed interest rate policy,” Guinigundo said.
Hot money, merchandise trade

A private bank economist said the BoP deficit may be traced to the balance of trade shortfall and the exit of foreign portfolio investments in February.

“We suspect both the merchandise trade gap and portfolio outflows were the culprit for the swelling of the net outflows in February after a short reprieve in January,” said Bank of the Philippine Islands Vice President and lead economist Emilio Neri Jr.

With global oil prices at least more than 60 percent higher in February from a year earlier and domestic demand for imports remaining strong with favorable domestic credit conditions, a continued acceleration in exports would have translated to a widening of the trade deficit, Neri said.

“The controversy in domestic mining and other political concerns may have contributed to a more than $100 million net outflow of funds in the local stock market as well,” Neri added.

The Philippine Statistics Authority is scheduled to release the February balance of trade figures in April.
In January, the trade deficit narrowed from a year earlier but widened month-on-month as imports continued to outpace exports.

The balance of trade in goods in January 2017 registered a $2.314 billion deficit, narrowing from a $2.638 billion shortfall a year earlier.

Meanwhile, $409.01 million in net foreign portfolio investment flowed out of the country in February, reversing net inflows of $57.74 million a year earlier and $301.33 million in January.