Domestic trade falls 6.1% in Q1

THE value of domestic trade in the first quarter decreased by 6.1% year on year on the back of slower overall economic growth and a rise in wholesale prices.

The total value of domestic trade in the first quarter of 2017 was recorded at P164.773 billion, down from P175.451 billion posted in same three months of the previous year.

The total quantity of goods that changed hands within the country stood at 4.85 million tons, lower by 9.5% from the first quarter of last year.

Union Bank of the Philippines chief economist Ruben Carlo O. Asuncion said that the decrease in domestic trade can be attributed to lower economic growth during the first quarter of 2017.

“The lower value and quantity of domestic trade just actually reflects the lower-than-expected Q1 2017 economic growth at 6.4%,” Mr. Asuncion wrote in an e-mail to BusinessWorld.

The Philippines’ gross domestic product (GDP) grew 6.4% in the first quarter of 2017, slightly below the 6.5% lower-end of the target set by the government. The upset can be blamed on base effects, as the economy last year benefited from election-related spending.

Angelo B. Taningco, economist at Security Bank, also blamed the first- quarter slowdown in domestic trade on rising wholesale prices.

“The decline in domestic trade during the first quarter of 2017 may have been a result of rising wholesale prices that tend to reduce demand for most of the tradable commodities,” he said in an e-mail to BusinessWorld.

The year-on-year increase in the general wholesale price index (GWPI) averaged 6.9% in the first quarter of 2017, compared with the 0.3% contraction in the same three months of 2016.

Slower government spending as well likely affected consumer demand, said Guian Angelo S. Dumalagan, market economist at Land Bank of the Philippines.

“Government spending slowed, likely because of transition issues and absence of onetime boost from election spending,” said Mr. Dumalagan.

TRANSPORT EQUIPMENT TOP TRADED

By type of commodity, machinery and transport equipment remained the top traded locally, with value amounting to P56.971 billion, or 34.9% of the total value of traded commodities.

The value of machinery and transport equipment that changed hands among the country’s regions however fell by 8.1% from P62.025 billion in the first quarter of 2016.

Food and live animals placed second with P40.007 billion (24.2%), and manufactured goods classified chiefly by material ranked third with P18.302 billion (11.1%).

Chamber of Automotive Manufacturers of the Philippines, Inc. (CAMPI) President Rommel Gutierrez maintained a positive evaluation of the industry’s performance for the first quarter of this year despite the overall decrease in trade value.

“The automotive industry did well during the first quarter of 2017. Car sales continued to register modest growth. Demand for brand new vehicles remained steady with constant flow of supply from most brands,” Mr. Gutierrez said in an e- mail to BusinessWorld.

He said the industry is maintaining a good general outlook for the rest of the year, adding that the target of 450,000 units for the whole year would be kept.

“With the current trend, this target is achievable,” he added.

Western Visayas registered the highest outflow value amounting to P33.472 billion or 20.3% of the total. Central Visayas and National Capital Region followed with P32.476 billion (19.7%) and P30.973 billion (18.8%), respectively.

For inflows, Central Visayas posted the highest value at P29.008 billion or 17.6% of the total, while Cagayan Valley had the lowest inflow at P19.87 million.

A positive outlook for domestic trade, however, is seen for the rest of 2017.

“Domestic trade is expected to increase for the rest of the year, and this hopefully will be boosted by the increasing infrastructure spending by the Duterte government,” said Unionbank’s Mr. Asuncion.

“Improving exports and the rebound in manufacturing will further support more robust domestic trade in the Q2 and (second half ) of 2017,” he added.

This year, about P860.7 billion, or 5.4% of GDP is allocated for spending on public infrastructure, higher than the P756.4 billion or 5.1% of GDP programmed last year. The National Economic and Development Authority Board yesterday approved 11 infrastructure projects cumulatively worth P305.6 billion. —