The ratio between the country's economy and the net value of services and compensations paid by foreign enterprises to Filipinos rose in the first-quarter of the year, climbing up further the measurement ladder.
Based on Finance Undersecretary Gil Beltran's latest Economic Bulletin, the country's services trade and income balances in the balance-of-payments (BOP) stood at 13.31 percent of gross domestic product (GDP) in January to March this year.
The end-March figure is an improvement compared to 12.35 percent registered in the same period last year.
Beltran said in his report submitted to Finance Secretary Carlos Dominguez III that the expansion pace registered in the first three-months is aligned with the upward trajectory the country saw in the past four years.
Trade in services, primary income and secondary income balances all rose as a percent of GDP, Beltran said, noting the economic ratio was at 13.32 percent last year, 12.85 percent in the previous year and 11.57 percent in 2014.
The biggest contributor to this growth was secondary income which consists of unrequited transfers mostly from remittances. It grew 9.5 percent during the quarter, said Beltran, who is also the Department of Finance's (DOF) chief economist.
Net receipts in the secondary income account reached $6.5 billion, higher than the $5.9 billion registered in the previous year due to increased personal transfers, which mainly came from overseas Filipino workers' remittances
Trade in services came second with services balance rising by 19 percent as services exports rose by 6.3 percent and services imports lagged behind at 2.0 percent. BPO (business process outsourcing) services account for over a half of services exports, Beltran said.
Net receipts in trade-in-services rose to $2.37 billion in the first-quarter from $1.99 billion in the same period last year owing to higher net receipts in technical, trade-related and other business services; manufacturing services on physical inputs; and computer services.
Export revenues in BPO sector totaled $5.5 billion at end-March, a growth of 9.9 percent from the $5 billion earnings in the previous year.
Primary income which comes mainly from outward direct and portfolio investments by Filipinos less payments for inward foreign investment and foreign loans also rose by 5.7 percent and has been growing from a measly 0.24 percent of GDP since 2014, the finance official said.
The primary income account recorded net receipts during the first quarter, jumping by 5.7 percent to $678 million from $642 million last year owing to decline in net payments of investment income.
In nominal terms, the country's total services and income in BOP amounted to $9.52 billion in the first-quarters, up by 11.4 percent from $8.545 billion in the same period last year.
The Philippines' full year 2016's total services and income reached $40.6 billion, higher compared to $37.59 billion in 2015 and $34.47 billion in the previous year.
Beltran, meanwhile, noted that the surplus in services compensated the trade deficit incurred in goods, which enabled the country to raise import volumes of capital goods without causing any foreign exchange crisis.
The rise of services trade and income balances buttresses the country's capability to sustain rapid economic growth. Remittances and BPO services which account for a significant percentage of these balances boost investible savings that fuel the country's expansion, Beltran said.
The country should continue to invest in education and health to sustain this stream of exports. At the same time, it should continue to maintain the health of the financial sector which allocates these resources to their most efficient uses, he concluded.
Source: Department of Finance