The Philippine central bank raised its forecast for the current account gap to a record, reflecting a surge in imports on the back of the economy’s recovery and higher commodity costs.

The 2022 deficit is now expected at $20.6 billion, about 8% higher than the $19.1 billion seen previously. 

That would be a “record high,” Paolo Alegre, central bank senior director, said at a briefing Friday. The current account, the broadest measure of trade, registered a $12 billion gap in the first half as imports growth outstripped exports.

“We need to import these goods to increase the capacity of the economy,” Alegre said, adding that “we shouldn’t be worried” as the nation has enough buffers and dollar inflows such as remittances from overseas workers.

The widening current account gap, as well as pressure on the nation’s budget, expose the peso to further volatility at a time when capital is already flowing out of emerging markets amid the US Federal Reserve’s sustained monetary tightening. The local currency has weakened about 2% against the dollar month-to-date.