BOP posts $2.2-billion surplus in 1st half

MANILA, Philippines – The country’s balance of payments (BOP) surplus rose to $484 million in the second quarter of 2009 from $221 million a year ago, bringing the first half surplus to $2.2 billion, mainly due to improving economic conditions worldwide, the Bangko Sentral ng Pilipinas (BSP) reported yesterday.

The first half surplus was 14.6 percent more than the $1.9 billion surplus recorded in the same period last year, the BSP said.

From January to June, the current account recorded a higher surplus of $3.9 billion, compared with the $2.2 billion surplus in the same period last year, buoyed by gains in the current transfers and trade-in-goods accounts.

On the other hand, the capital and financial account in the first half of 2009 reversed to a $1 billion net outflow from the $891 million net inflow in the same period in 2008 amid a decline in investments.

The BOP is a record of the country’s transactions with the rest of the world and it is closely watched by investors. A BOP surplus means that there were more dollar inflows than outflows while a BOP deficit means that there were more dollar outflows than inflows. The current account and the capital account are components of the BOP. The current account comprises of trade and services while the capital account records long-term and short-term inflows.

In the second quarter, the current account surplus more than doubled to $2 billion from $899 million in the same quarter last year on the back of higher receipts from trade in services such as business, personal, cultural and recreational and a lower trade-in-goods deficit.

BSP Governor Amando M. Tetangco Jr. said the positive outcome in the country’s external payments position reflected the initial signs of global economic recovery.

“During the quarter, the current account continued to perform strongly, more than offsetting the net outflow recorded in the capital and financial account,” he said.

The capital and financial account, on the other hand, recorded a $260 million net outflow, a reversal of the $436 million net inflow registered in the same quarter.

As with the first half capital and financial account, the decline in the second quarter was also because of a drop in other investments.

“The decline was largely traced to the net outflow in other investments, which more than offset the net inflows in direct and portfolio investments,” Tetangco said.

Data from the BSP showed that direct investments in the second quarter recorded a net inflow of $783 million, more than twice the net inflow of $309 million in the comparable quarter in 2008 because of higher foreign direct investments.

Similarly, portfolio investments reversed to a net inflow of $482 million in the second quarter from a net outflow of $1.6 billion a year ago, as signs of global economic recovery stimulated investor appetite for investment opportunities. –Iris C. Gonzales (The Philippine Star)