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Trade deficit widens to $5.678 billion in May

The Philippines' trade deficit widened in May as imports grew by over 30% during the month, data released by the Philippine Statistics Authority (PSA) on Tuesday revealed.

The balance of trade in goods (BoT-G) recorded a $5.678-billion deficit in May, higher than the $5.438-billion deficit in April and the $3.180-billion deficit in the same month last year.

A trade deficit indicates that the country imported more than it exported during a period, while a surplus indicates that the country exported more than it brought in goods from other countries.

Imports amounted to $11.988 billion, up 31.4% from $9.121 billion in May 2021 and higher than the $11.490 billion recorded in the previous month.

The annual growth in imported goods was driven mainly by the increase in the value of all the top 10 major commodity groups, led by mineral fuels, lubricants, and related materials, which climbed 128.7%.

This was followed by cereals and cereal preparations, up 65.7%; iron and steel, up 64.2%; transport equipment, up 51.1%; and plastics in primary and non-primary forms, up 17.3%.

Double-digit increases were also seen in the imports of telecommunication equipment and electrical machinery, up 13.0%, electronic products, up 12.7%, and industrial machinery and equipment, up 11.4%.

Exports for the month grew at a slower annual rate of 6.2% to $6.309 billion from $5.941 billion in the same month last year. This also compares with the $6.141 billion in April.

Seven out of the 10 major commodity groups posted annual increases, led by coconut oil, which surged by 180.5%, other mineral products by 32.9%, and chemicals by 23.6%.

Growth was also seen in the exports of machinery and transport equipment, up 11.9%; other manufactured goods, up 2.6%; electronic equipment and parts, up 1.3%; and electronic products, up 1.3%.

Declines were seen in the export of ignition wiring sets, cathodes, and fresh bananas.

Total external trade for the month stood at $18.298 billion, up 21.5% from $15.063 billion in May, and higher than the $17.631 billion in April.

According to Rizal Commercial Banking Corp. (RCBC) chief economist Michael Ricafort, Philippine imports and exports could still continue to post annual growth as COVID-19 cases ease.

In a separate commentary, Ricafort said the trade deficit could be sustained at the $4-billion to $5-billion level monthly as long as global commodity prices remain elevated.

“Though (this) could be offset by any reduction in demand due to higher/elevated prices of imported global oil and other commodities, given the further increase in global oil/commodity prices after Russia’s invasion/war with Ukraine,” he said.

“Nonetheless, exports and imports still among record highs on a monthly basis, as consistent in the pick up on global trade, amid improved global economic recovery as more countries move closer to population protection/herd immunity,” he added. —VBL, GMA News