June import data bare electronics’ weakness
PHILIPPINE exports of electronics in the coming months may be in for a retreat after imports of components used in the assembly of the country’s top dollar earner sputtered at the close of the second quarter.
Preliminary data from the Philippine Statistics Authority show that merchandise imports grew by 15.4% to $6.85 billion last June from $ 5.94 billion in the same month last year.
But June’s growth was still slower than the 39.3% and 23.0% logged the previous month and a year ago, respectively.
This brought the year- todate purchases from abroad to $38.746 billion, 17.7% more than the $ 32.917 billion in the same six months of 2015, or more than twice the government’s full-year growth forecast of 7% for 2016.
With exports in the first six months of 2016 having contracted by 6.31% year on year to $26.832 billion, the country ended the period with a balance of trade in goods deficit of $11.914 billion.
In a statement, Socioeconomic Planning Secretary Ernesto M. Pernia brushed off the rising
trade deficit, saying: “Trade deficit is going to be there for some time.”
“It is usually the case in most developing countries.”
At the same time, Mr. Pernia, who heads the National Economic and Development Authority (NEDA) as director- general, noted the strong growth of capital goods imports.
By product category, last June’s increase in imports was fuelled by capital goods and consumer goods, which increased year-on-year by 64.6% and 32.6%, respectively.
Capital goods, which made up nearly a third of total imports that month, included telecommunication equipment and electrical machinery, industrial machinery and equipment, power generating and specialized machinery and transport equipment.
Consumer goods comprised 17.1% of the country’s purchases from abroad last June.
“This performance shows the strength of domestic demand in the country particularly in consumption and investment, as reflected by the latest real GDP [ gross domestic product] growth of 7.0% in the second quarter,” Mr. Pernia said.
In a report, Nomura Research the latest imports figure “supports our view that [Philippine economic] growth is becoming increasingly investment-led,” adding that which consumer goods remained “solid,” capital goods imports had “soared.”
Last week, the government reported that GDP growth accelerated to 7% in the second quarter from JanuaryMarch’s 6.8%, driven by the 27.2% increase in investments and the 7.3% growth of personal consumption expenditures.
Despite the strength of capital imports, Philippine purchases of electronic components suffered a 15.8% decline to $ 1.697 billion last June from $2.016 billion in the same month last year.
Electronics, which at 24.8% is the Philippines’ single biggest commodity import, is assembled in the country for export elsewhere. Electronics comprised over half of the Philippines’ total exports last June.
Alvin P. Ang, economics professor at the Ateneo de Manila University, said the drop in electronics imports “is not a good sign for exports.”
NEDA’s Mr. Pernia agreed that imports of electronic components will be weighed down by the “relatively weak outlook for electronics exports.”
Nicholas T. Mapa, associate economist of the Bank of the Philippine Islands, expects imports to “slow down in the coming months, as raw materials importation continues to peter out as manufacturers drawdown on existing inventory and not bringing in new material.”
As a result, the trade deficit is “expected to narrow as import compression kicks in and exports finally bounce back after 15 months of contraction,” Mr. Mapa said.
“Capital importation is also seen to slow as corporates are probably done with their expansionary projects for the time being.”
Out of the top 10 major import sources, China remained the biggest contributor at 18.8 % of the total bill, followed by Japan with 12.4%. —