Trade gap narrows to $500M in April
THE country’s trade deficit shrank to $500 million in April from a month and a year earlier as both exports and imports plunged by at least 50 percent, the Philippine Statistics Authority (PSA) reported on Wednesday.
Data from the statistics agency showed that the amount was a 86.9- percent contraction from the $ 3.79 billion in the same month last year and a 78.81-percent decline from the $2.36 billion in March.
A deficit is recorded when the value of imports is greater than that of exports, while a surplus is registered when it’s the other way around.
Outbound shipments fell by 50.8 percent to $2.78 billion from last year’s $5.69 billion, which the PSA said was the “highest recorded annual decrease” since January 2009, when it hit 40.6 percent.
The drop was attributed to the decline in seven of the top 10 major export commodity groups, led by other manufactured goods (-64.0 percent), machinery and transport equipment (-63.6 percent), and coconut oil (- 55.5 percent). The others are electronics products (- 48.6 percent), other mineral products (-46.7 percent), bananas (-28.0 percent) and gold (-9.5 percent).
Inbound shipments tumbled by 65.3 percent to $3.28 billion in the fourth month from $9.45 billion a year earlier, which the agency said was the highest since the 37-percent decrease in April 2009.
This decline was blamed on the drop in 10 import commodity groups. These include transport equipment (-89.8 percent); mineral fuels lubricants and related materials (-87.4 percent); miscellaneous manufactured articles (-75.5 percent); other food and live animals (-71.5 percent); industrial machinery and equipment (-70.8 percent); and telecommunication equipment and electrical machinery (-56.0 percent).
As a result, the country’s total external trade fell by 59.8 percent to $6 billion in April from $15.1 billion year-on-year.
According to Rizal Commercial Banking Corp. (RCBC) chief economist Michael Ricafort, the decline in exports and imports was caused by the enhanced community quarantine the government imposed in mid-March, sharply reducing economic activities.
The quarantine aimed to curb the rapid spread of the coronavirus disease 2019 (Covid-19) in the country. As of Wednesday, at least 23,732 Filipinos have contracted the highly contagious respiratory disease. Of this number, 4,895 recovered and 1,027 died.
Despite the April data, Ricafort said external trade “could start to pick up, especially [in] the latter part of” May, noting that lockdowns in the country have started easing since May 16.
This allowed “more businesses to gradually restart [ their] operations and sales in phases…” Ricafort told TheManilaTimes in an email.
He noted that, while such trade could start to pick up, it could still be in contraction, as economic recovery could be slower.
Ricafort also said that as more economies around the world were reopening and resuming activities activities, this could support the “gradual” improvement in the country’s exports and imports in the coming months.
“Economic recovery, including the pick-up in both imports and exports, could be gradual, amid [the implementation of physical] distancing and other measures [and as] the risk of new Covid-19 infections remains,” he said.