– BMI, a unit of Fitch Solutions, has projected that the country’s current account deficit will ease to 4 percent of gross domestic product (GDP) this year from 4.4 percent of GDP in 2022. In a commentary released to the press Wednesday, BMI said the country’s deficit has been narrowing since the first quarter of 2023 at 4.3 percent, which is likely to continue for the rest of the year. ‘Lower import bills on the back of softening energy prices, coupled with resilient remittance inflows, will provide support for the current account,’ BMI added. Energy prices last year surged amid the Russia-Ukraine war, which brought the average Brent crude price at USD99 per barrel. For this year, Brent is expected to average at USD80 per barrel. ‘The softening of global oil prices will help alleviate pressure on Philippines’ import bills,’ it added. BMI also projected that Philippine imports would slow down to 35.9 percent of GDP this year, lower than the 37.7 percent of the economy last year. However, BMI said the level remains elevated compared to the average of 32 percent from 2013 to 2019. ‘President (Ferdinand R.) Marcos’ (Jr.) plans to sustain infrastructure spending at 5 to 6 percent of GDP per annum will lead to increased demand for capital goods, pushing import bills higher throughout his presidential term,’ the report added. On the other hand, BMI said Philippine exports will remain weak this year as global growth is seen to remain lukewarm throughout the year. Exports share to GDP is expected to fall from 24.3 percent in 2022 to 23.4 percent in 2023. However, remittances from overseas Filipinos will provide support for the country’s current account. ‘Historically, remittances (are) always been a huge contributing factor to the Philippine economy, accounting for an average of nearly 10 percent of GDP per annum in the last decade. Despite the global economic downturn, we are expecting current transfer growth to remain stable at 3 percent year-on-year, as remittance inflows tend to be countercyclical,’ the BMI said
Source: Philippines News Agency
