Phl trade deficit widens in July on weak exports
The country’s trade deficit further widened in July as exports saw a dismal slight growth.
The Philippine Statistics Authority reported Tuesday trade deficit hit $3.55 billion as imports continued to outpace exports.
Despite the slight upturn in exports which grew 0.3 percent in July, Philippine Exporters Confederation Inc.- Cebu executive director Fred Escalona seemed to remain pessimistic on the industry's outlook this year.
"If July registered a 0.3 percent growth I am pretty sure that August would be in the negative territory," he told The FREEMAN yesterday.
The July trade deficit was higher than the $3.35 billion in June but lower than the $3.7 billion deficit in May, PSA data showed.
Exports had contracted for straight six months this year except in July when they grew to $5.85 billion from $5.83 billion during the same month in 2017. Imports rose 31.6 percent to $9.40 billion during the same comparable period.
"As the global trade situation becomes less encouraging, improving the overall climate for export development becomes all the more indispensable," economic planning chief Ernesto Pernia said in a statement yesterday. "Thus, the government needs to fast track the crafting of the Ease of Doing Business Act’s implementing rules and regulations.
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 USD50 billion worth of goods each.
“Trade war fears have weighed on business sentiment, and we now see softer global activity. With a resolution unlikely in the short term, the dispute is expected to dampen growth in both economies and drag down growth in the wider global economy,” Pernia said.
To boost exports, Pernia said there is a need to promote forward and backward linkages. This is through projects such as the Agribusiness Support for Promotion and Investment in Regional Expositions or ASPIRE, which integrates marketing development support services to farmers, fisherfolk, and MSMEs, and linking exporters to sources of export financing.
He added the high cost of domestic and international shipping and cargo handling also needs to be addressed.
“Addressing costs of trade will ensure that imported goods, especially capital and intermediate products, are less expensive and are efficiently utilized in the country’s Build, Build, Build program,” he said.
Pernia further noted the deterioration in the global economic environment underlines the importance of ensuring domestic economic fundamentals remain strong.