Surplus of local BOP current account plunges in 2015

By
Kam Leong

In 2015, the current account of the city’s Balance of Payments (BOP) posted a decline of 32.3 per cent in its annual surplus due to the decrease in the local exports of services, according to preliminary data released yesterday by the Monetary Authority of Macau (AMCM).
BOP – comprising current account, capital account and financial account – is a statistical statement summarising external transitions of an economy with the rest of the world. Last year, the city’s overall BOP surplus was preliminarily estimated at MOP18.6 billion (US$2.3 billion) by the monetary body, compared to a revised surplus of MOP617 million for 2014.
During the year, the city’s surplus from the services account went down by 27.1 per cent year-on-year to MOP240.7 billion from MOP330.4 billion in 2014, as service exports decreased by 24.9 per cent year-on-year to MOP271.3 billion, whilst service imports fell marginally by 0.9 per cent to MOP30.6 billion.
The merchandise trade deficit narrowed by 2.9 per cent year-on-year to MOP91 billion from MOP93.7 billion. The decrease in the deficit is attributable to the nine per cent increase in the city’s imports of goods, to MOP15.6 billion, which offset a decline of 1.2 per cent in exports of MOP106.7 billion.
In addition, the net outflows of primary income and secondary income both recorded decreases in the year compared to 2014.
The primary income account, which reflects cross-border flows of factor income, posted a net outflow of MOP29.8 billion, compared to that of MOP63.1 billion one year ago as total payments fell by 46.5 per cent year-on-year to MOP66.9 billion.
In addition, the net outflow of secondary income went down by 20.8 per cent year-on-year due to the decline in payments of some 19.7 per cent year-on-year to MOP17.5 billion. The account comprises mainly inflows and outflows of personal transfers as well as donations received or made by local social service organisations with respect to the rest of the world.
Financial account
On the other hand, the financial account of the BOP registered a surplus of MOP33.7 billion, which was slashed by 87 per cent year-on-year compared to a surplus of MOP101.6 billion in 2014, as the net outflow of net financial non-reserve assets plunged by 85 per cent year-on-year to MOP15.2 billion.
Of the total non-reserve assets, direct investment recorded a net outflow of MOP3.5 billion in 2015, which is down by 53.9 per cent compared to that of MOP7.6 billion one year ago
Meanwhile, a net inflow of MOP76.1 billion was recorded in the city’s other investment, which is contrary to a net outflow of MOP65.9 billion in 2014. AMCM explained the turnaround is due to the increase of local banks’ external liabilities in the period.
In addition, financial derivatives continued to register a net inflow in 2015, amounting to MOP2.7 billion, slightly up by 3.8 per cent year-on-year.
On the other hand, the city’s portfolio investment recorded a net outflow of MOP97.4 billion last year, which surged by 115.5 per cent compared to MOP45.2 billion in 2014. According to the monetary authority, the growth was boosted by the significant increase in external securities investments held by local residents.