BOP position in Q3 2023 posts a lower deficit reverses to surplus in first three quarters of 2023

Third Quarter 2023 Developments

The country’s balance of payments (BOP) position registered a deficit of US$524 million in Q3 2023, markedly lower than the US$4.7 billion deficit recorded in the same quarter of the previous year.

This development was due to the decline in the current account deficit, which resulted mainly from the narrowing of the trade in goods deficit coupled with the increase in net receipts in trade in services, and primary and secondary income accounts.

Meanwhile, the financial account registered lower net inflows in Q3 2023 due to the decline in net inflows of other and direct investments, and trading in financial derivatives.

Current Account. The current account registered a deficit of US$2.1 billion (equivalent to -2.0 percent of the country’s GDP) in Q3 2023, lower than the US$6.0 billion deficit (equivalent to -6.5 percent of the country’s GDP) recorded in the same quarter in 2022. 

This development resulted mainly from the narrowing of the trade in goods deficit as well as the expansion in net receipts in the trade in services, and primary and secondary income accounts.

Capital Account. The capital account recorded net receipts of US$19 million in Q3 2023, higher by 30.9 percent than the US$14 million net receipts recorded in Q3 2022.

This was due mainly to the reversal of the US$5.0 million net payments from gross acquisition of non-produced non-financial assets (e.g., patents, trademarks, and copyrights) in Q3 2022 to US$0.4 million net receipts from net disposals in the third quarter of 2023.

Financial Account. The financial account registered net inflows (or net borrowing by residents from the rest of the world) amounting to US$2.0 billion in Q3 2023, a 40.2 percent decline from the US$3.4 billion net inflows recorded in the same period of the previous year.

This outcome resulted mainly from the decline in net inflows of other investments, and to a slighter degree, direct investments, and trading in financial derivatives.  Meanwhile, net outflows of portfolio investments declined.

January – September 2023 Developments

The BOP position posted a surplus of US$1.7 billion in the first nine months of 2023, a reversal from the US$7.8 billion deficit recorded in the same period a year ago.  This development was due primarily to the narrowing of the current account deficit, which resulted from lower trade in goods deficit, and higher net receipts of trade in services. Moreover, the financial account posted higher net inflows driven mainly by the reversal to net inflows of portfolio investments and higher net inflows of other investments.

Current Account. The current account recorded a deficit of US$10.9 billion (equivalent to -3.5 percent of GDP) in the first three quarters of 2023, lower by 39.6 percent than the US$18.1 billion deficit (equivalent to -6.2 percent of GDP) recorded in the same period last year. The lower current account deficit emanated from the narrowing of the trade in goods deficit, alongside the increase in net receipts of the trade in services and secondary income accounts. This was partly mitigated by the lower net receipts in the primary income account.

Capital Account. The capital account recorded higher net receipts amounting to US$55 million in the first nine months of 2023 from US$11 million in the same period last year. This was due mainly to the decline in gross acquisitions of non-produced non-financial assets (e.g., patents, trademarks, and copyrights) to US$2 million from the US$49 million recorded in the previous year.

Financial Account. The financial account registered higher net inflows (or net borrowing by residents from the rest of the world) of US$12.9 billion in the first three quarters of 2023 vis-à-vis the US$11.1 billion net inflows recorded in the same period of the previous year. This emanated mainly from the reversal of the portfolio investment account from net outflows to net inflows, alongside an uptick in net inflows from the other investment account and trading in financial derivatives. This, however, was mitigated by the lower net inflows registered in the direct investment account during the period.

Gross International Reserves

The country’s gross international reserves (GIR) reached US$98.1 billion as of end-September 2023, higher than the US$93.0 billion level registered as of end-September 2022.

Exchange Rate

The peso averaged at P55.96/US$1 in Q3 2023, depreciating by 0.6 percent from an average of P55.65/US$1 in Q2 2023. Meanwhile, the peso appreciated year-on-year by 0.7 percent from an average of P56.36/US$1 in Q3 2022. For January to September 2023, the peso averaged at P55.49/US$1, depreciating against the US dollar by 3.6 percent from an average of P53.51/US$1 in the first nine months of 2022.

View Full Report here: https://www.bsp.gov.ph/Media_And_Research/Balance of Payments Report/2023/BOP_3qtr2023.pdf