RP hits record monthly BOP deficit in Oct
Reuters | 11/17/2008 7:56 PM
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The Philippines posted a record monthly balance of payments (BOP) deficit of $1.195 billion in October as foreign direct investment slowed and overseas investors pulled out of local markets, data from the central bank showed on Monday.
Weak exports and costlier imports also dampened the overall BOP. The Philippines is the world's biggest buyer of rice this year and imports nearly all of its crude oil needs.
Demand for its key electronics exports has slowed as some of its main markets such as the United States face recession, but separate data showed steady remittances from overseas Filipino workers were cushioning the country's balance of payments.
The October BOP deficit was the largest since 1999 when the central bank changed its BOP reporting methodology.
The latest data reduced the surplus for the first ten months of 2008 to $345 million from a $1.5 billion surplus in the first nine months and a $7.87 billion surplus in January to October of 2007, the central bank said in a statement.
The country had net foreign portfolio outflows of $911.5 million in January to October, reversing a net inflow of $3.7 billion in the same period of 2007, as risk averse investors pulled out of emerging markets on expectations of a sharp slowdown in the world economy due to the global financial crisis.
The Philippines expects its BOP surplus to fall below $2 billion this year, the lowest since 2004, compared with a surplus of $8.58 billion last year.
Figures would be worse but for a stream of money coming into the country from overseas-based workers.
Remittances in September climbed an annual 16.9 percent, with inflows the same as in August at $1.3 billion despite the global financial crisis, the central bank said in a separate statement.
This brings total remittances in the first nine months of the year to $12.3 billion, up 17.1 percent from a year earlier.
Analysts have said steady remittances, equivalent to about a tenth of gross domestic product and an engine of consumer spending, will shield the Philippine economy from the ravages of the global crisis.
A 16 percent slide in the value of the peso against the dollar this year will boost the purchasing power of the funds sent home by overseas Filipinos.
The central bank expects remittance inflows to grow 15 percent this year from 2007 and 10 percent next year in dollar terms alone.
"The continuous stream of remittances from overseas Filipinos remains a source of strength for the economy amid the challenging external environment," the central bank said in a statement.
Data from the government's overseas employment agency showed the number of Filipinos taking up jobs abroad reached more than 1 million in the first nine months of the year, up nearly 26 percent from a year earlier.
Most of Filipino workers who left the country went to the Middle East and Asia, the data showed. But the majority of overseas Filipinos are based in the United States, the epicentre of the worst financial crisis in 80 years.
About one-tenth of the Philippines' 90 million people live and work overseas.
