First-half current account gap shows more pressure in store for the peso

By Elijah Joseph C. Tubayan, Reporter

THE COUNTRY’S current account balance reversed to a deficit in the second quarter, largely under the weight of a growing merchandise trade gap, making the first-semester shortfall hit the Bangko Sentral ng Pilipinas’ (BSP) full-year forecast and signalling more pressure ahead on an already beleaguered peso.

The peso — which for much of this year been hitting its weakest value against the dollar in about 12 years, making it one of Asia’s worst-performing currencies — on Friday firmed 0.18% from the preceding day to P53.97 against the greenback, but was still eight percent weaker year-to-date.

The current account deficit stood at $2.9 billion in the second quarter, compared to a $157-million year-ago surplus, a development BSP on Friday attributed to a growing trade-in-goods deficit.

The current account provides a snapshot of the country’s overall economic interaction with the rest of the world covering trade in goods and services; remittances from overseas Filipino workers (OFW); profit from Philippine investments abroad; interest payments to foreign creditors; as well as gifts, grants and donations to and from abroad.

“This development was due to the higher trade-in-goods deficit and the lower net receipts in the primary income account [consisting of OFW remittances and profit from investments abroad], even as the trade-in-services and secondary income [gifts, grants and donations to and from abroad] posted increased net receipts during the quarter,” Redentor Paolo M. Alegre, Jr., head of the BSP Department of Economic Statistics, said in a media briefing at the BSP…

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