Trade deficit widens further in July to $3.55 billion – PSA

The country’s trade deficit further widened in July this year after imports continued to outpace exports as the global trade situation becomes less encouraging, data from the Philippine Statistics Authority (PSA) showed yesterday.

Latest government data revealed that the Philippines’ trade deficit increased to $3.55 billion in July, higher by 5.9 percent compared with $3.35 billion in the previous month.

During the month, exports increased for the first time this year after six-straight months of contraction while the growth in imports was the highest so far in 2018.

Total exports slightly improved by 0.3 percent to $5.85 billion from $5.83 billion in the same month last year while imports rose 31.6 percent year-on-year to $9.4 billion.

In a statement, Socioeconomic Planning Secretary Ernesto M. Pernia said that the country’s total trade grew by 17.5 percent, reaching $15.2 billion in July 2018 buoyed by a hefty increase in imports.

“As the global trade situation becomes less encouraging, improving the overall climate for export development becomes all the more indispensable. Thus, the government needs to fast track the crafting of the Ease of Doing Business Act’s implementing rules and regulations,” Pernia said

In January to July this year, total merchandise trade reached almost $100 billion, 7.7 percent higher than the same period last year due to the 15.7 percent cumulative growth in imports, making up 61.2 percent of total trade.

Merchandise imports grew by nearly a third, driven by import of capital goods, raw materials and intermediate goods, which posted hefty growth, indicating continuing investment for higher productivity.

Exports continued its recovery, albeit minimally, as forest and mineral products propped up total exports growth.

However, the World Trade Outlook Indicator points toward a continued slowdown in trade in the third quarter. The slowdown in activity is attributed to rising trade barriers, moderating growth in China, higher energy prices, and elevated policy uncertainty.

Moreover, the bilateral trade war between the US and China has resulted in a growing coverage of tariff levies throughout the year, with both countries already imposing additional 25 percent tariff on $50 billion worth of goods each.