BPOs lessened PH trade deficit impact — ADB

MANILA, PHILIPPINES — Rising remittances and service exports partly cushioned the impact of the merchandise trade deficit, according to the Asian Development Bank (ADB).

In its latest Asian Development Outlook, the ADB said the surplus in services “expanded on gains in business processing outsourcing, finance, and tourism.”

The current account deficit almost tripled from 1.5% of Gross Domestic Product (GDP) in 2021 to 4.4% of GDP in 2022.

The merchandise trade deficit also widened from 13.4% of GDP in 2021 to 17.2% in 2022 due to strong imports to meet higher consumer and capital goods demand.

The International Monetary Fund (IMF) explains that a trade deficit means “the country is importing more goods and services than it is exporting.”

But the IMF also clarified that “whether a deficit is good or bad depends on the factors giving rise to that deficit.”

Meanwhile, the ADB said the Philippine economy would grow moderately at 6 per cent in 2023 despite elevated inflation.