Trade deficit hits record high in Oct
THE Philippines’ trade deficit hit a record high in October as imports grew twice as fast as exports, the Philippine Statistics Authority (PSA) reported on Tuesday.
Inbound shipments rose by 13.1 percent year-on-year to $8.21 billion, PSA data showed, while exports grew at a slower pace of 6.6 percent to $5.36 billion.
The total balance of trade in goods hit a deficit of $2.84 billion in October 2017, higher than the $2.22 billion recorded a year earlier.
It was also the largest monthly deficit since data compilation began in 1991, Socioeconomic Planning Secretary Ernesto Pernia said.
Year-to- date, the trade deficit widened by 0.9 percent to $21.94 billion from $21.74 billion.
‘Still a good sign’
Standard Chartered economist Chidu Narayanan said he was not worried by the widening as “details reveal a more benign picture”.
For instance, the sharp import growth was driven by increased iron and steel shipments expected to be used by the construction sector.
Instead of capital goods, the rise was driven by raw material imports, particularly semi-processed items.
“Indeed, this is a good sign, certainly better than imports being driven by mineral fuels, as has been the case so far this year,” he added.
Looking at the export picture, meanwhile, the economist said there were fewer surprises.
Overall growth was held back by contractions in apparel and other manufactures but electronic products, which made up more than half of all exports, rose 14 percent year- on-year, he noted.
Total trade
The National Economic and Development Authority (NEDA), for its part, said continued exports growth, economic cooperation and trade facilitation initiatives would sustain the country’s trade gains.
Total trade grew by 10.4 percent year- on-year in October 2017, picking up from September’s 4.6 percent.
“We are encouraged by the performance of Philippine trade in recent months, especially with the consistent positive performance of exports. Cooperation and trade initiatives are integral to sustaining these gains,” Pernia said in a statement.
Total merchandise trade grew by 11.2 percent for the first six months of 2017 compared to the first half last year.
“For 2018, we are looking at improved performances in exports of agricultural products and semiconductors, which continue to comprise a huge portion of Philippine exports,” the Cabinet official said.
Pernia said the trade gains and positive outlook would be bolstered by initiatives such as the Asean Seamless Trade Facilitation Indicators (ASTFI) that could help in reducing transaction costs by 10 percent in two years.
The Asean-Hong Kong, China Free Trade Agreement (AHKFTA) and Asean– HKC Investment Agreement (AHKIA) signed last month will also increase and facilitate trade in goods and services within the region, he added.
“Against this backdrop, Philippine exports will likely remain in the positive territory and should pick up due to higher demand during the holiday season,” Pernia said.