BSP lifts export, import growth forecast

THE Bangko Sentral ng Pilipinas (BSP) raised its forecast for exports and imports growth this year on the back of the better-than-expected expansion in the first quarter. BSP Deputy Gov. Diwa Guini-gundo told reporters that exports would likely grow by 15 percent, up from an earlier forecast of 12 percent.

He said imports growth would likely accelerate to 20 percent, also higher than the earlier projection of 18 percent.

This is the second time the central bank revised its merchandise trade forecasts.

Guinigundo said exporters have a more favorable outlook than what was originally anticipated, adding that electronics manufacturers’ book-to-bill ratio continued to grow by 100 percent.

“This means that the market is still strong,” he said.

Comprising at least 60 percent of the country’s exports, electronics is the Philippines’ biggest dollar-earning merchandise shipment abroad.

The BSP thus expects an improved current account position of $8.6 billion or 4.6 percent of the country’s gross domestic product (GDP), up from the previous forecast of $4.5 billion or 2.5 percent of GDP.

As a result, the country’s gross international reserve (GIR) is expected to reach about $49 billion to $50 billion this year, up from an earlier estimate of $48 billion to $49 billion.

The BSP holds international reserves for the foreign exchange requirements of the country in case the domestic commercial banks’ supply of the greenback falls short of demand. An ample GIR level helps prop up the peso and keep domestic inflation at bay.

Preliminary data from the BSP showed that the country’s GIR level rose to $48.4 billion at end-June, or $7 million higher than the end-May level of $47.7 billion.

Guinigundo said the upward revisions in export and imports forecast have already been included in the country’s balance of payments (BOP) projections.

“Based on the BOP projection of about $3.7 billion at the end of the year, this is consistent with the $50-billion GIR at year-end,” he said.

The country is benefiting from the resilience of remittances, which allowed the BOP to enjoy a $388-million surplus in May.

This resulted in a cumulative surplus of $2.733 billion in the first five months of the year, or 27.5 percent higher than the $2.143 billion registered in the same period last year.

The BOP summarizes the country’s economic transactions with the rest of the world, with a surplus indicating dollar earnings outstripping payments. In contrast, sustained deficits erode the country’s dollar reserves, in turn pulling the peso and raising domestic inflation. –LAILANY P. GOMEZ REPORTER, Manila TImes