The Bangko Sentral ng Pilipinas (BSP) said on Friday it believed the worst was finally over for the Philippine economy after the country’s external accounts improved.
In a virtual briefing, BSP Governor Benjamin Diokno said there was a “stark difference” between the behavior of these accounts in the second quarter — the height of the strict, coronavirus disease 2019 pandemic-related lockdowns imposed — and in the third.
“It was like night and day, which suggest that the worst is over,” he added.
External accounts summarize all interactions of the local economy with the rest of the world.
Diokno also said the country’s overall balance of payments (BoP) position posted a surplus of $2.1 billion in September, bringing the year-to-date surplus to $6.9 billion. The nine-month tally is wider than the $5.6-billion surplus in the same period a year ago.
“The current BoP surplus was supported mainly by higher net foreign borrowings by the national government, lower merchandise trade deficit, overseas Filipino remittances and FDI (foreign direct investments),” he explained.
In terms of money coursed by overseas Filipinos through banks, cash remittances in the ninth month accelerated by 9.3 percent to $2.60 billion. It brought the year-to-date figure to $21.9 billion, down 1.4 percent from $22.2 billion a year ago.
The Bangko Sentral chief said the January-to-September growth in cash remittances was much better than the 5-percent contraction earlier estimated by the BSP.
“The altruistic impulse of overseas Filipinos to remit more to their families for basic sustenance and other immediate needs in times of crisis is expected to continue, particularly when labor conditions start to recover,” he said.
Diokno also reported that net inflows of FDI continued to grow, reaching $637 million in August, up 46.9 percent from $434 million a year ago. In the eight months ending August, these inflows amounted to $4.4 billion, slightly lower than the year-earlier $4.7 billion.
“Behind this development was the increase in net equity capital investments, which posted a cumulative growth of 99.6 percent to $1.1 billion from $550 million in the same period in 2019,” he said.