Philippine trade gap widened to $3.577B in August — PSA

The Philippine trade deficit widened in August even as exports grew faster than imports from the previous month, the Philippine Statistics Authority (PSA) reported Tuesday.

Government data showed that the balance of trade in goods (BoT-G) deficit widened to $3.577 billion in August from $2.179 billion the same month last year, but narrower than the $3.659 billion in July.

This comes as exports posted an annual growth of 17.6% to $6.465 billion from $5.499 billion, with all the top 10 major commodity groups in terms of value of exports posting annual increases.

The growth was led by cathodes and sections of cathodes which surged by 162.5%, followed by electronic equipment and parts up 41.8%, and coconut oil up 31.8%.

Increases were also seen in other mineral products, ignition wiring set and other wiring sets, other manufactured goods, electronic products, chemicals, metal components, and machinery and transport equipment.

According to Rizal Commercial Banking Corp. (RCBC), the latest export figures would have been bigger if not for the COVID-19 pandemic.

“Some disruptions in the global supply chain for various products such as some electronics/semiconductors and other manufactured products largely brought about by the pandemic since last year would have led to higher demand for Philippine exports, which, in turn, helped spur imports of raw materials, capital equipment, and other inputs for production/manufacturing,” he said in a separate commentary.

“The proposed measures on more localized/granular level would effectively further re-open the economy from lockdowns that would again lead to some pick up in business/economic activities, including manufacturing and investments including FDIs that could also fundamentally lead to further pick up in both exports and imports, going forward,” he added.

Meanwhile, imports increased by 30.8% to $10.043 billion from $7.679 billion the same month last year, also due to the growth reported in all of the top 10 major commodity groups.

Mineral fuels, lubricants, and related materials jumped 116.2%, followed by medicinal and pharmaceutical products by 73.2%, iron and steel by 55.6%, plastics in primary and non-primary forms by 47.6%, and cereals and cereal preparations by 26.3%.

Growths were likewise recorded in imports of electronic products, transport equipment, other food and live animals, industrial machinery and equipment, and miscellaneous manufactured articles.

The latest figures brought the country’s total external trade in goods for the month up 25.3% to $16.51 billion, of which 60.8% were imported goods while the rest were exported goods.

According to ING Bank Manila Senior Economic Nicholas Antonio Mapa, the latest data could point to the so-called “twin deficits” which threaten the pace of recovery.

“With the current account balance swinging back into the red and the similar reversal in flows on the financial account, we could see the Balance of Payments edge closer to the red resulting in a weaker currency,” he said in a separate commentary. — RSJ, GMA News