PHL exports contract 5.2%, imports down 14.9%, trade gap narrows to $2.42B in January —PSA

The Philippines’ external trade performance continued its contraction in January this year as the global trade environment remained challenging due to the lingering threat of the COVID-19 pandemic.

Data released by the Philippine Statistics Authority (PSA) on Friday showed that the country’s total external trade in goods - the summation of imports and exports- in the first month of the year shrunk by 11.1% to $13.401 billion from $15.08 billion in January 2020.

This was a reversal from the 1.5% total trade growth posted in the same period last year.

The negative trade performance resulted from the 5.2% drop in exports and 14.9% decline in imports during the period.

This also resulted in a balance of trade in goods deficit of $2.42 billion, narrower by 30.9% from the $3.5-billion trade shortfall posted in January 2020.

Balance of trade is the difference between the value of exports and imports during a period.

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

Sought for comment, Rizal Commercial Banking Corp. chief economist Michael Ricafort said “an offsetting risk factor is the new variants/strains of the coronavirus that are more contagious.”

He said this led to some lockdowns and travel restrictions in Europe and in other countries around the world, including the major trading partners of the Philippines, “thereby could slow down the economic recovery prospects, as well as the pick up in the demand for Philippine exports and imports.”

Exports

In particular, exports in January 2021 amounted to $5.49 billion, down 5.2% from $5.78 billion year-on-year due to annual decreased posted by fresh bananas at -46.9%, manufactured goods at -12.8%, machinery and transport equipment at -11.9%, and coconut at -11.7%.

“Renewed lockdowns in developed countries especially the rolling out of lockdowns/restrictions since the latter part of 2020, in view of the emergence of the new coronavirus variants slowed demand for exports by larger extent,” Ricafort said.

Transport export value of personal protective equipment (PPE) and medical supplies, however, posted a growth of 11% to $2.72 million from $2.45 billion a year earlier.

“By major trading partner, exports to the United States of America (USA) comprised the highest export value amounting to $854.43 million or a share of 15.6% to the total exports during the month,” the PSA said.

Completing the top five major export trading partners with their export values and percent shares to the total exports were Japan with $806.04 million or 14.7% share, China with $800.06 million or 14.6% share, Hong Kong with $711.77 million or 13%, and Thailand with $291.93 million or 5.3%.

Imports

Imports, meanwhile, amounted to $7.91 billion, down 14.9% from $9.29 billion in January 2020.

This is the 21st consecutive month of negative imports growth since May 2019.

“The annual decrement of imported goods in January 2021 was due to the decrease in nine of the top 10 major import commodities,” the PSA said.

The annual rate of decline was fastest in industrial machinery and equipment at -36.9%, followed by transport equipment by -36.8%; and mineral fuels, lubricants, and related materials by -33.6%.

By major type of goods, imports of raw materials and intermediate goods accounted for the largest share of $3.20 billion or 40.4% of the total imports in January.

Imports of capital goods ranked second with a share of $2.59 billion or 32.7%, followed by consumer goods with $1.41 billion or 17.9% share.

Likewise, total import value for PPE and medical supplies in January increased to $24.81 million, up 33$ year-on-year.

The People’s Republic of China was the country’s biggest supplier of imported goods valued at $1.93 billion or 24.4% of the total imports during the period.

Completing the top five major import trading partners with their corresponding import payments and percent shares to the total imports were Japan with $667.77 million or 8.4% share, Indonesia with $526.71 million or 6.7% share, Republic of Korea with $524.84 million or 6.6%, and USA with $518.39 million or 6.6%.

“For the coming months, further pick up in the economic recovery locally and worldwide would result [in] a corresponding pick up in both imports and exports, especially if new COVID-19 cases are reduced further especially in view of the rollout of COVID-19 vaccines in the latter part of 2021, thereby justifying further re-opening of the economy that entails faster pick up in importation and export production, especially if Metro Manila's GCQ since June 2020 would be eased to MGCQ [with] higher capacity for many businesses/industries that may entail more imports and exports,” Ricafort said.

“Furthermore, increased government spending especially on infrastructure, as also made more possible with the timely approval of the 2021 national budget as well as the extension of allocation/funds availability for the 2020 national budget to end-2021 and for the Bayanihan 2 to end-June 2021, would result to a faster pick up in importation of capital equipment, construction materials, and other inputs needed for the various infrastructure projects/Build Build Build Program,” he added. -MDM, GMA News