Trade gap widens to year-high $3.7 B in May
The country’s trade deficit widened by 48 percent in May to a year-high $3.7 billion as exports continue to plunge and imports keep growing, the Philippine Statistics Authority (PSA) reported yesterday.
The gap was higher than the $2.51 billion deficit recorded in May 2017 and the $3.62 billion a month earlier.
The PSA said the country’s total external trade in goods in May reached $15.22 billion, reflecting an increase of 5.1 percent from $14.48 billion in the same month in 2017.
Total exports fell by 3.8 percent to $5.76 billion in May from $5.99 billion in May 2017 on slower outbound shipments of ignition wiring sets used in vehicles, mineral products, as well as electronic equipment and parts.
On the other hand, total imports increased by 11.4 percent to $9.46 billion in May from $8.49 billion in the same month last year because of faster growth in inbound shipments of raw materials and intermediate goods such as mineral fuels and lubricants; iron and steel; manufactured articles; electronic products; telecommunication equipment and electrical machinery; plastics in primary and nonprimary forms; metal products; food and live animals; and industrial machinery and equipment.
The US was the top destination of Philippine exports with outbound shipments of $840.15 million in May, a share of 14.6 percent to total exports during the month. This was higher by 6.6 percent from $788.09 million in May 2017.
Hong Kong placed second with exports of $796.47 million, 13.8 percent of the total exports in May. Total exports to Hong Kong grew by 13.8 percent from $699.92 million value posted in May 2017. Exports to People’s Republic of China came in third with $761.40 million or 13.2 percent of the total. This went up by 8.9 percent from $699.12 million in the same month of 2017.
China, meanwhile, was the top source of imports in May 2018 with inbound shipments valued at $1.92 billion, up by 18.8 percent from $1.62 billion in May 2017.
Republic of Korea accounted for 10.3 percent or an import value of $978.61 million in May 2018. This represents an increase of 42.4 percent from the May 2017 value amounting to $687.04 million.
Japan, including Okinawa, ranked third with imports valued at $901.27 million in May 2018, a share of 9.5 percent. This declined by 5.6 percent from $955.12 million in May 2017.
US including Alaska and Hawaii, placed fourth with imports valued at $689.71 million in May 2018, a share of 7.3 percent. This decreased by 5.2 percent from $727.69 million in May 2017.
Socioeconomic Planning Secretary Ernesto Pernia said addressing cumbersome regulations, enhancing trade facilitation, and ensuring better access to trade finance would help improve the country’s business climate for exports.
“The recent passage of the Ease of Doing Business Act of 2018 should promote trade as it aims to reduce bureaucracy and corruption, factors which weigh down on economic activity. Its timely implementation is needed to improve trade facilitation,” he said.
He added that opportunities from free trade agreements (FTAs) should also be maximized by facilitating programs that would increase awareness of industry players on the benefits of these agreements.
The recent ratification of the Philippines-European Free Trade Association FTA would boost exports to member states such as Iceland, Liechtenstein, Norway and Sweden, he said.
“Successful negotiations for the PH-EU FTA is expected to secure more permanent preferential duties for Philippine export products compared with the EU generalized system of preferences (EU GSP+), thus further expanding market base,” Pernia said.
NEDA said other products such that can potentially become major drivers of exports growth should be given better exposure. These include vehicle autoparts, coconut, bananas, travel goods and handbags, tuna, carrageenan, and activated carbon.