The country’s current account (CA) deficit swelled to $4.81 billion in the first quarter of the year from $32 million in the same quarter last year due to the higher trade in goods deficit, according to the Bangko Sentral ng Pilipinas (BSP).
BSP senior director Redentor Paolo Alegre Jr. said the CA deficit in the first quarter was equivalent to five percent of gross domestic product (GDP) resulted mainly from the widening of the trade in goods deficit and the slight decline in net receipts in services.
“This development reflects the sustained growth in domestic activity in Q1 2022, with all economic sectors posting positive outturns, as authorities continued to ease mobility restrictions imposed to mitigate the spread of the COVID-19 virus, and as a greater percentage of the population continued to receive vaccine and booster shots against the virus,” Alegre said.
The CA consists of transactions in goods, services, primary income and secondary income. This account measures the net transfer of real resources between the domestic economy and the rest of the world.
A CA deficit occurs when a country spends more on imports than it receives on exports.
Data showed the trade in goods posted a wider deficit of $16.4 billion in the first quarter of the year, 49.1 percent higher than the $11 billion deficit recorded in the same quarter last year as imports grew at a faster rate than exports.
Exports of goods booked a double digit growth of 11.3 percent to $14.5 billion in the first quarter amid robust external demand for electronics, particularly semiconductors and telecommunication.
On the other hand, imports of goods jumped by 28.6 percent to $30.8 billion driven by increase in imports of fuels and lubricant as well as raw materials and intermediate goods.
The BSP also reported that the country’s balance of payments (BOP) position reversed to a surplus of $495 million in the first quarter of the year from a deficit of $2.8 billion in the same quarter last year.
“This outcome transpired on the back of the reversal of the financial account balance to net inflows in Q1 2022 from net outflows in Q1 2021, due to lower
net outflows of portfolio investments alongside the uptrend in net inflows of other investments,” Alegre said.
He added that the robust net inflows in the financial account were recorded, notwithstanding external risks, such as the unresolved Russian-Ukraine conflict, the start of monetary policy tightening by several major central banks, and the resurgence of COVID-19 cases in many Asian economies.