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Philippines: Trade deficit seen widening in February – HSBC
MANILA, Philippines — The country’s trade deficit likely widened anew in February as imports remain elevated as part of the government’s massive infrastructure program, according to British banking giant HSBC.
HSBC said the trade shortfall of the Philippines may hit $3.72 billion in February, 12 percent wider than the previous month’s $3.32 billion.
“We expect the trade balance to widen in February as exports decline due to cyclical factors and imports remain elevated in preparation for the government’s planned infrastructure projects,” HSBC said in its latest Global Economic Calendar.
HSBC said import growth may expand faster at 16 percent in February from 11.4 percent in January, while export growth may drop by 0.5 percent in February.
“Imports have been high since the fourth quarter of last year due in large part to raw material imports, particularly iron and steel,” the investment bank said.
The Duterte administration has committed to ramp up infrastructure spending allocating up to P8.4 trillion until 2022.
The Philippines has booked twin deficits as both its trade and current account (CA) balances registered shortfalls amid strong imports resulting in the weakening of the peso against the dollar.
In 2017, the country’s current account balance incurred a deficit of $2.52 billion or 0.8 percent of gross domestic product (GDP), more than double the shortfall of $1.2 billion in 2016 and the highest since 1999 when the country recorded a deficit of $2.87 billion.
This as more dollars went out than what the country made. The current account position measures the net transfer of real resources between the domestic economy and the rest of the world. It consists of transactions in goods, services as well as primary and secondary income.
The widening could be traced to the expanding trade-in-goods deficit that more than offset the increased net receipts in the trade-in-services, as well as secondary and primary income accounts last year.
“We expect this trend to continue with a higher current account deficit forecast this year at 0.9 percent of GDP,” HSBC said.
The Philippines incurred a monthly record trade deficit of $4.02 billion in December, erasing the previous record of $3.84 billion registered in November.
Source: https://www.philstar.com/business/2018/04/09/1804044/trade-deficit-seen-widening-february-hsbc#DiP0fGqI4mtM5RF5.99