Philippines: Import slowdown tempers foreign trade growth in February

MANILA, Philippines — Foreign trade growth moderated in February after country’s imports grew at a slower pace during the month, state statisticians reported Friday.

The Philippines’ total external trade amounted to $15.85 billion in February, expanding 18.1% year-on-year, data from the Philippine Statistics Authority showed. That was slower compared to 20.3% annual growth rate recorded in January.

Sales from the country’s exports expanded at an annualized rate of 15% to $6.2 billion, better than 9% growth in the preceding month. Imports, meanwhile, grew 20.1% year-on-year to $9.7 billion, lower compared to 27.7% expansion recorded in January.

The sluggish import growth, in turn, narrowed the country’s trade deficit to $3.5 billion in February, from $4.7 billion in January.

A country incurs a trade gap if its import bill exceeds its exports receipts. When the economy emerged from lockdowns, that gap started to widen again as businesses beefed up their importation to meet recovering local demand.

The heightened purchases abroad have boosted the Philippines’ demand for dollars which, in turn, weakened the country’s currency. The weak peso could make imports more costly for the country and potentially fuel inflation.

On the flip side, a falling peso could support the Philippines’ exports, which could be sold in other countries at much cheaper price compared to products priced in stronger currencies. — Ian Nicolas Cigaral