OFWs remittances boost BOP surplus of US$1.2 Billion

THE country’s balance of payments registered a surplus in the first quarter of 2012 at US$1.2 billion.

This was, however, lower by 64.4 percent compared to the US$3.5 billion surplus in the same quarter a year ago, as both the current and capital and financial accounts yielded lower net inflows during the quarter, the Bangko Sentral ng Pilipinas said.

BSP said the surplus in the current account was boosted mainly by higher inflows from overseas Filipino (OF) remittances and business process outsourcing (BPO) services transactions while the net inflows in the capital and financial account emanated largely from increased foreign direct investments.

After economic activity across the globe slowed down markedly at the end of 2011 due to the heightened sovereign debt crisis in some parts of the euro area, global economic prospects have gradually improved during the quarter.

The threat of a sharp worldwide slowdown eased with improved activity in the U.S. and the policy measures undertaken by the European Central Bank to foster the proper functioning of the euro area economy (e.g., offering of cheap loans to European banks, the approval of a new financing package for Greece, bold efforts of Italy and Spain to implement economic reforms).

A fragile economic recovery is underway, but the risks remain elevated amid high unemployment, slow growth, continued economic woes in Europe, and higher oil prices. Nonetheless, growth in Asia is anticipated to gain momentum with economic activity remaining relatively solid in most emerging and developing Asian economies while weak recovery will likely persist in major advanced economies.

As a result of the continued surplus in the BOP, gross international reserves (GIR) reached US$76.1 billion as of end-March 2012, reflecting a 15.4 percent (US$10.1 billion) increase from the year-ago GIR level of US$66 billion.

At this level, reserves could sufficiently cover 11.4 months’ worth of imports of goods and payments of services and income. It was also equivalent to 10.9 times the country’s short-term external debt based on original maturity, BSP said.

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