Philippines: Exports, imports escalate in April on low base effects

MANILA, Philippines — Foreign trade posted a huge jump in April as both imports and exports registered hefty upticks due to low base effects from last year’s strictest lockdown, with the total deficit still at manageable levels.

Latest data from the Philippine Statistics Authority (PSA) showed that external trade in goods swelled by 107.5 percent to $14.16 billion in April, reversing a contraction of nearly 55 percent in April 2020.

Exports surged 72.1 percent to $5.71 billion, with almost all destinations posting increments. Imports, meanwhile, soared by 141 percent, bringing the total import value to $8.45 billion.

In turn, the country’s trade deficit reached $2.73 billion in April, a huge leap from the $187 million in the same period last year.

As economists expected, the substantial gains in the trade data were due to the unusually low base effects for both imports and exports in view of the lockdowns last year.

It was in April 2020 when the Philippines and much of the rest of the world imposed the strictest lockdown across economies to avert the sharp rise in COVID-19 cases, with the pandemic peaking during that period.

Such a move led to a sharp reduction in economic activities coupled with global supply bottlenecks that affected global trade.

On a monthly basis, exports and imports both registered declines, largely attributed to the reimposition of lockdowns amid the resurgence of COVID-19 cases.

Total exports for April went up as electronic products, the country’s top export, registered a solid increase of 63 percent to $3.22 billion.

“Faster recovery in exports reflects the faster economic recovery in the country’s major export markets such as the US, China, and in other developed countries, as some countries worldwide also posted new record highs in exports volume despite the pandemic,” Rizal Commercial Banking Corp. chief economist Michael Ricafort said.

Other exports showed strength in April, particularly ignition wiring sets that posted more than 1,000 percent growth, as regional manufacturing operations returned.

The country’s top 10 exports, which cornered 84 percent of the total, jumped 84 percent to $4.82 billion during the month. The top 10 export destinations of the Philippines also increased by 65.7 percent to $4.77 billion.

Huge growth was seen in exports to the US, Japan, Thailand and Germany. China was the top export destination with purchases worth $953 million, 17 percent of the total exports.

Meanwhile, inbound shipment of goods and services continued to expand, still due to a low base, with the sub-sectors of capital goods, raw materials, fuel and consumer imports all posting triple-digit gains.

Fuel imports registered nearly 400 percent increase amid more expensive oil prices in the world market.

China is still the country’s biggest supplier of imported goods at $2.16 billion, about 26 percent of the total.

“We expect exports and imports to continue to expand sharply in the coming months as the economy reopens,” ING Bank senior economist Nicholas Mapa said.

Despite the sharp swings for both exports and imports, the country’s overall trade deficit stayed modest at $2.73 billion, which should translate to a current account surplus and near-term support for the Philippine peso.

Maps said the country’s trade balance will likely remain at manageable levels with capital-intensive imports not likely to pick up all that much given the still-subdued investment appetite.

“With the trade deficit close to $3 billion, we expect the Philippines to post only a modest current account surplus although a slip back into deficit territory may be a possibility if corporate demand for the dollar accelerates,” Mapa said.

“In the near term, the Philippine peso may still enjoy an appreciation bias but the window for further appreciation may be closing soon as the authorities maneuver to reopen the economy further,” he said.