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Philippines: Trade gap persists in March to reach $2.61 billion
MANILA, Philippines — The Philippines’ trade deficit persisted last month on the back of marginal increase in imports and weaker exports, the government reported on Wednesday.
The country’s balance of trade in goods swung to a $2.61 billion deficit in March, wider than the $2.10 billion shortfall a year ago but narrower than the $3.06 billion gap last February.
The Philippines has been suffering from trade deficit for months, as demand for imports of construction-related goods gets a boost from President Rodrigo Duterte’s plan to spend more than P8 trillion on infrastructure development to keep the country’s growth engine humming.
The increasing capital goods imports due to the infrastructure boom brought the country’s current account surplus to a deficit, which is expected to undermine the peso.
“I continue to expect a trade-in-goods deficit over the upcoming months. This is because the economy is geared towards more investment, especially on infrastructure, and this necessitates more imports,” said Angelo Taningco, an economist at Security Bank.
“As the trade-in-goods deficit will be persistent, then this will likely put depreciation pressure on the peso,” he added.
Exports went down by 8.21 percent to $5.5 billion in March from $6.00 billion a year ago.
Outbound shipments of electronic products, the country’s top export in March, amounted to $3.22 billion, growing by 6.8 percent from the $3.02 billion recorded in the same month last year.
Meanwhile, imports jumped by 0.1 percent year-on-year to $8.12 billion from $8.11 billion, spurred by purchases of electronic products, mineral fuels, transport equipment, industrial machinery and iron and steel.
“Exports are expected to rebound towards the end of the year, aligned with views of improving global growth. The rise in exports, however, might be more than offset by a stronger growth in imports amid the government’s ‘Build Build Build’ program. This would translate to a higher trade deficit this year,” said Guian Angelo Dumalagan, market economist at the Land Bank of the Philippines.
“Last quarter’s trade deficit is expected to subtract some points from growth. However, robust consumption and investment spending could more than compensate for the wider trade deficit, resulting in stronger gross domestic product growth in the first quarter,” he added.
The United States, including Alaska and Hawaii, was the Philippines’ top export destination last month with outbound shipments valued at $865.25 million, up by 4.4 percent from $828.66 million booked a year ago.
China was the Philippines’ biggest source of imports in March, with import payments reaching $1.24 billion, 12.0 percent lower than the $1.41 billion in the comparable period last year.
“As evident from the slowdown in trade figures of Asia, and even negative performance of the Philippines, China, and India in the latest exports figures, the Philippine government should double its efforts in marketing the country’s export products to international consumers,” Socioeconomic Planning Secretary Ernesto Pernia said in a statement.
“Exporters need to be provided with updated information that would enable them to tap countries with a huge market base to diversify their markets and decrease their vulnerabilities,” he added.
Source: https://www.philstar.com/business/2018/05/09/1813624/trade-gap-persists-march-reach-261-billion#EMjGicjl53evJk2i.99