Fitch Solutions, a unit of Fitch Ratings, on Thursday warned the Philippines it could face challenges managing its current account deficit over the long term, as domestic goods demand recovers from the pandemic shock.
“A lack of a strong manufacturing base and growing energy needs will weigh on the goods balance, while constraints around growing service exports will see the current account flip to a deficit of 3.0 percent of GDP [gross domestic product] by 2030,” it said.
Fitch Solutions said policy makers should manage the economy’s external financing needs over the long term, with a need for foreign direct investment over ‘hot money’ inflows for economic stability.
“We at Fitch Solutions forecast the Philippines current account balance to shift to a widening deficit over the coming years,” it said.
“As the economy gradually climbs back to pre-pandemic output levels in 2022, we anticipate the current account to slip back into deficit,” it said.