Manila, Philippines - The country’s balance of payments (BOP) surplus dropped 74 percent in the first half of the year as a weak global economy heightened risk aversion among foreign investors, the Bangko Sentral ng Pilipinas (BSP) reported yesterday.
BOP surplus fell to $1.316 billion from January to June this year, 74 percent lower than the previous year’s $5.016 billion.
For June alone, surplus likewise decreased to $14 million from $222 million posted in June 2011. The monthly figure was also down from $138 million surplus in May.
“Over-all, the global economy is much weaker than last year. As a result, foreign investments were weaker while external debt servicing continued,” BSP Deputy Governor Diwa Guinigundo told reporters in a text message.
BOP summarizes a nation’s transactions with the rest of the world. It measures the capacity of a country to settle its debts and meet external trade obligations.
A surplus means there were more capital inflows than outflows during a particular period. It also shows that the Philippines has more resources to meet future external requirements.
The BSP last month revised its BOP forecast for the year to $2.6 billion from $2.8 billion initially seen, reasoning out that the world economy continues to be weak in light of the prevailing debt crisis in the eurozone.
BOP surplus hit $10.179 billion in 2011.
BOP is composed of current and capital accounts. Current account transactions include remittances from overseas Filipino workers and exports, while those of capital account pertain to foreign investments in the stock and bond markets as well as long-term capital investments in the country. - By Prinz P. Magtulis