PHL trade gaps narrows further to $2.41B in August

The country’s trade gap narrowed further in August as export receipts posted a slight growth while imports declined during the period, the government reported Thursday.

Data released by the Philippine Statistics Authority (PSA) showed that the balance of trade in goods (BoT-G) narrowed to $2.41 billion in August, 33.1% narrower than the $3.60-billion deficit in August 2018.

A deficit indicates that the value of a country’s imports exceeded export receipts, while a surplus indicates more export shipments than imports.

Imports fell by 11.8% to $8.66 billion during the month due to decreases in eight of the top 10 major import commodities such as iron and steel (-44.2%); transport equipment (-29.1%); cereals and cereal preparations (-23.4%).

Declines were also noted in mineral fuels, lubricants and related materials (-11.9%); plastics in primary and non-primary forms (-8.7%); electronic products (-6.0%); and other food and live animals (-4.4%).

“Among the imported commodity groups, import bills of electronic products, valued at $2.35 billion, contributed the highest share of 27.1% to the total imports. Import of this commodity group went down by 6.0%, from $2.50 billion in August 2018,” the PSA said.

Meanwhile, exports rose by 0.6% to 6.25 billion in August from the $6.22 billion recorded in the same month in 2018.

“This was due to the increases in export sales of three of the top 10 major export commodities, namely, gold; ignition wiring set and other wiring sets used in vehicles, aircrafts and ships; and electronic products,” the PSA noted.

In a separate statement, Socioeconomic Planning Secretary Ernesto Pernia cited the need to make local products more competitive to attract more markets overseas.

“We must continue to initiate programs that provide comprehensive packages of support for products with comparative advantages, including related industries, to facilitate expansion in the international market,” he said.

“As subdued investments in emerging markets, coupled with the persisting trade tensions, continue to hamper global expansion, implementation of timely reforms will vastly improve the country’s resilience to external shocks,” Pernia added.

Security Bank Corp. chief economist Robert Dan Roces noted that while minimal, the Philippines may be experiencing difficulties given the trade tensions between China and the United States.

“While we believe that the country is largely insulated from the ongoing US-China trade debacle due in part to a lower exposure compared with some of our regional neighbors, the slowdown in … export … also highlights difficulties in the midst of the protracted war,” he said in a separate statement.

“We reiterate that government expenditure, alongside household spending, will prove critical in driving growth to cope with a slowing global economy. And with no end in sight … to the trade war, these expenditures have become a necessary condition to realize more growth as foreign direct investments and trade become unreliable,” he added. —VDS, GMA News