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BSP reviews external sector projections

By LEE C. CHIPONGIAN

Bangko Sentral ng Pilipinas (BSP) Governor Benjamin E. Diokno will take into account the “high level of uncertainty” when reviewing their external account forecasts especially foreign direct investments (FDIs) due to the pandemic impact.

Bangko Sentral ng Pilipinas (BSP) Governor Benjamin E. Diokno.(Bloomberg)

Bangko Sentral ng Pilipinas (BSP) Governor Benjamin E. Diokno.(Bloomberg)

“With the unprecedented coronavirus pandemic and its adverse impact on global outlook and investor confidence, we recognize that any projection on external account performance would only be tentative and would have a high level of uncertainty,” Diokno said on Thursday.

“By necessity, forecasts will be based on some scenario assumptions and estimates which would tend to have considerable uncertainty as they impact on baseline projection prior to the coronavirus outbreak.
Nonetheless, BSP will release its external account forecast based on firmer market indications once approved by the Monetary Board.”

The BSP has been continuously reviewing and assessing external account numbers such as the balance of payments (BOP) and the gross international reserves. FDIs, remittances, and foreign portfolio inflows are components of the BOP under its current and financial accounts.

“Specific to FDIs, we recognize that the coronavirus pandemic can have a huge adverse impact on investment flows globally in 2020 as a result of the projected global contraction, disruption of world value chains and the consequent effect on investment decisions and plans,” the BSP chief added. “The Philippines is no exception (but) this negative impact can be temporary, however. On the positive side, we see an opportunity for countries, such as the Philippines, to gain from recent experience.”

Diokno said the pandemic has hit on the global demand shock. But the revived trade war between US and China – and while the world has yet to find a vaccine for COVID- 19 – could have a positive spin for the country.


Source: Manila Bulletin (https://business.mb.com.ph/2020/05/28/bsp-reviews-external-sector-projections/)

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