Phl faces risk of huge twin deficits - Nomura

Prioritizing infrastructure projects and slashing rice import tariffs will likely lead to large twin deficits in the Philippines, making fiscal consolidation more challenging and contributing to persistent peso weakness against the dollar, according to Nomura Global Research.

- KEISHA TA-ASAN

In a report, Nomura said the Philippines’ current account deficit may reach 2.7 percent of gross domestic product this year, slightly higher than the 2.6 percent of GDP recorded in 2023.

The forecast is well above the pre-pandemic (2016-2019) average of 1.1 percent of GDP. It is also higher than the one percent projection of the Bangko Sentral ng Pilipinas (BSP) for 2024.

“We expect the current account deficit to remain large and fiscal consolidation targets to be challenging this year,” Nomura said, adding that rising capital goods and raw materials imports due to infrastructure implementation could widen the Philippines’ current account balance.