Merchandise trade starts 2019 with bigger deficit — PSA data

THE COUNTRY’s trade-in-goods deficit widened in January as exports declined and imports rebounded.

Preliminary data released by the Philippine Statistics Authority (PSA) on Tuesday showed January’s trade deficit at $3.756 billion, bigger than the $3.752 billion deficit in December 2018 and $3.163 billion in January 2018.

Merchandise export sales in January amounted to $5.279 billion, 1.7% less than the $5.373 billion recorded in the same month last year.

At the same time, the country’s import bill grew by 5.8% to $9.035 billion in January from last year’s $8.536 billion.

In a statement, the National Economic and Development Authority (NEDA) noted January’s trade performance to be “largely due to a rebound in imports… supported by increases in the import values of consumer goods, capital goods, and raw materials and intermediate goods.”

EXPORTS

NEDA also noted lower foreign sales of manufactured goods and minerals that offset gains in exports of forest and total agrobased products.

Export of manufactured goods, which made up 82.9% of total sales in January, went down 2.5% to $4.375 billion from $4.488 billion in the same month in 2018.

However, electronic products bucked the trend as this grew 1.7% to $2.791 billion, with semi- conductors contributing $2.037 billion, up 0.9% from $2.019 billion a year ago.

Outbound shipments of mineral products likewise declined 10.7% to $359.107 million from last year’s $402.147 million.

On the other hand, foreign sales of forest products surged by 116.3% to $24.485 million,

followed by petroleum products with 60.8% growth to $46.146 million and total agro-based products with a 3.8% increase to $375.411 million.

IMPORTS

On the import side, purchases of major types of goods went up across the board except for mineral fuels, lubricant and related materials, which recorded a 9.9% decline in January to $820.543 million.

Leading growth among import categories during the month were consumer goods, which increased by 19.1% to $1.604 billion from $1.347 billion in January 2018.

Consumer goods comprised 17.8% of that month’s import bill.

Imports of raw materials and intermediate goods, which made up 39.3% of total imports, increased by 1.8% to $3.550 billion.

Capital goods, which made up 33% of the import total, grew 8.9% to $2.986 billion from $2.741 billion.

ASSESSMENT

Ruben Carlo O. Asuncion, Union Bank of the Philippines, Inc. chief economist, in an e-mail attributed mineral exports’ weakness to the fact the government “has shown hostility in the past two years” towards the mining sector.

“Although this hostility seems to be waning, there has been no issued orders that could help propel recovery and growth of the said sector,” he said.

Furthermore, Mr. Asuncion ascribed the decline of manufactured goods exports to “weak perception” on the prospects of further trade, particularly in Asia, as well as the “inherent economic slowdown in major economies.”

“We know that China is one of the country’s major trading partners and it is the same China that is currently involved in trade issues with the United States,” Mr. Asuncion said.

ING Bank N.V. Manila senior economist Nicholas Antonio T. Mapa said in a note that growth of consumer goods imports showed consumption “remains vibrant.”

However, he said capital formation “may have reached its peak” given slower growth of raw materials and capital goods.

UnionBank’s Mr. Asuncion expects weakness of the country’s exports to persist this year, even as “there is upside on the potential resolution of the US-China trade conflict through a possible trade agreement between the world’s largest economies…” —