Trade deficit hits new record high

THE COUNTRY’s trade balance posted a fresh record-high shortfall in October as growth of imports continued to outpace that of exports, the government reported on Tuesday.

Preliminary data from the Philippine Statistics Authority showed the October trade deficit at $4.212 billion, bigger than September’s $3.723 billion and $2.585 billion in October 2017.

Import payments rose 21.4% year on year to $10.32 billion in October, easing from September’s 26.1%, but faster than the yearago 17% growth.

Export sales rose 3.3% year on year to $6.108 billion, accelerating from the 0.8% growth in September, but slower than the 17.4% print in October 2017.

“Exports climbed for a fifth consecutive month in October 2018 amid positive performance of manufactures and forest products,” the National Economic and Development Authority (NEDA) noted in a separate statement.

“Imports from our major trading partners continued to trace an upward trend, while exports

improved modestly,” Socioeconomic Planning Secretary Ernesto M. Pernia was quoted in the NEDA statement as saying.

To date, exports were down 1.2% to $57.067 billion against the downgraded two-percent target of the Development Budget Coordination Committee (DBCC) for full-year 2018.

On the other hand, imports grew 16.8% to $90.985 billion versus the DBCC’s revised nine percent projection for this year.

On a cumulative basis, the balance of trade yielded a $33.918-billion deficit, bigger than the $20.128-billion gap recorded in last year’s comparable 10 months.

Outbound shipment of manufactured goods, which made up 83.7% of total sales in October, grew 5.7% to $5.113 billion. Electronic products, which made up around 53.2% of the total exports, inched up by 0.6% to $3.248 billion.

Forest products were up 28.7% to $30.752 million.

On the other hand, value of exports of agro-based products decreased by 13.7% to $429.584 million, while that of petroleum products and mineral products shrank by 51% ($37.134 million) and 7.1% ($319.972 million), respectively.

On the import side, purchases of major types of goods went up across-the-board.

Imports of raw materials and intermediate goods, which made up 37.7% of total imports in October, increased by 22.2% to $3.892 billion.

Capital goods, comprising 33.6% of the import total, grew 21.2% to $3.466 billion.

Also growing that month were imports of mineral fuels, lubricant and related materials (45.4% to $1.228 billion) as well as consumer goods (7.5% to $1.665 billion).

FUELING FUTURE INVESTMENTS Economists noted the continued increase of importation of capital goods and raw materials signaled support for investment-led growth.

“[I]mport growth was much higher than expected…” Nomura economist Euben Paracuelles said in a research note, adding that “[t]his was led by capital goods and raw materials imports, while consumer goods imports slowed.”