DOF ECONOMIC BULLETIN ON CURRENT ACCOUNT
The current account strengthened in the first quarter of 2018 as the current account deficit narrowed from 1.2% in 2017 to 0.27% in 2018. The current account is the balance of exports and imports of goods, services and income balances.
Table 1. CURRENT ACCOUNT 2017 2018
Jan-Mar Jan-Mar
CURRENT ACCOUNT BALANCE (US$M) (860) (208) CURRENT ACCOUNT SURPLUS (% OF
GDP) -1.20% -0.27%
The deficit in the trade in goods balance widened by 7.2% to US$10.4B, from 13.56% of GDP to 13.64% of GDP as imports rose faster than exports on account of investment goods purchased from abroad to bolster productive capacity. This allowed the economy to grow by 6.8% in the first quarter, one of the highest growth rates in Asia.
However, this deficit was more than offset by the surplus in the trade in services and income balances which rose by 15.33% to US$10.18B, from 12.36% of GDP to 13.36%.
Earnings from BPOs, remittances inflows and earnings from investments abroad by Filipino citizens accounted for these substantial receipts.
Table 2. TRADE IN GOODS & TRADE IN
SERVICES BALANCES
2017 2018
Jan-Mar Jan-Mar Growth
TRADE IN SERVICES & INCOME BALANCES,
US$M 8,824 10,117 15.33%
% OF GDP 12.36% 13.36%
TRADE IN GOODS, BALANCE (US$M) -9,683 -10,385 7.2%
TRADE IN GOODS, BALANCE (% of GDP) -13.56% -13.63%
Net exports of services grew by 67.6% from US$1.77B to US$2.96B. This is accounted for by earnings of BPOs and tourism less imports of services.
Primary income which is accounted for by earnings of the country from placements abroad less earnings by other countries from local placements grew by 10.1% from US$681M to US$750M.
On the other hand, secondary income which is accounted for by remittances accruing to OFWs less incomes of expatriates remitted abroad also grew by 1.4%, from US$6.4B to US$6.5B.
TABLE 3. SERVICES TRADE & INCOME
BALANCE
2017 2018
Jan-Mar Jan-Mar Growth
TOTAL (SERVICES & INCOME) 8,824 10,117 15.33%
% OF GDP 12.36% 13.36%
TRADE IN SERVICES, BALANCE (US$M) 1,766 2,960 67.6%
TRADE IN SERVICES, BALANCE (% of GDP) 2.47% 3.89%
PRIMARY INCOME, BALANCE (US$M) 681 750 10.1%
PRIMARY INCOME, BALANCE (% of GDP) 0.95% 0.98%
SECONDARY INCOME BALANCE (US$M) 6,377 6,467 1.4%
SECONDARY INCOME, BALANCE (% of
GDP) 8.93% 8.49%
DOF View
The current account remains healthy with the current account deficit declining in the first quarter of 2018 compared with last year. Maintaining good macroeconomic
fundamentals by keeping the budget deficit manageable, keeping interest rates at the level that sustains the volume of investments and allowing the exchange rate to
maintain its competitive level will enable the country to sustain economic growth in the medium-term.
