Goods trade gap widens fur­ther in Septem­ber

Business World - - Front Page - By Jan­ina C. Lim Re­porter

THE CON­TIN­U­ING surge of mer­chan­dise im­ports and drop in prod­ucts sold abroad pushed the coun­try’s trade in goods deficit fur­ther to­wards the $4-bil­lion mark in Septem­ber, the Philip­pine Statis­tics Au­thor­ity (PSA) said on Wed­nes­day on the eve of its third-quar­ter gross do­mes­tic prod­uct (GDP) re­port.

For­eign sales of Philip­pine goods that month de­clined 2.6% to $5.83 bil­lion from $5.99 bil­lion in Septem­ber 2017. The drop capped three straight months of in­creases. Year to date, mer­chan­dise ex­ports were down 2.08% to $50.755 bil­lion against the gov­ern­ment’s two-per­cent full-year growth tar­get for 2018..

Mer­chan­dise im­ports in Septem­ber surged 26.1% to $9.75 bil­lion from the ad­justed $7.74 bil­lion in the same month last year, tak­ing year-to-date to­tal to $80.665 bil­lion, 16.271% up yearon-year against a nine per­cent of­fi­cial growth tar­get for 2018.

Septem­ber flows yielded a $3.93-bil­lion trade deficit that was more than dou­ble the year­ago $1.75-bil­lion gap, mark­ing the sixth straight month the deficit hov­ered past the $3 bil­lion mark.

Year-to-date trade deficit widened by 70.492% to $29.91 bil­lion

from the $17.543 bil­lion recorded in last year’s com­pa­ra­ble nine months.


Elec­tron­ics as a cat­e­gory was both the coun­try’s big­gest mer­chan­dise ex­ports and im­ports.

This group, which ac­counted for 58.6% of to­tal ex­ported goods in Septem­ber, saw out­bound sales grow 4.17% an­nu­ally to $3.414 bil­lion that month and by 5.743%to $28.46 bil­lion year-to-date.

Septem­ber also saw elec­tronic prod­ucts ac­count for 24.935% of to­tal in­bound goods at $2.432 bil­lion, 29.48% from a year ago. This item grew 20.532% to $20,818 bil­lion year-to­date.

ING Bank N.V. Manila Se­nior Econ­o­mist Ni­cholas An­to­nio T. Mapa noted that the Septem­ber trade gap is the “widest in recorded his­tory” and “worse than ex­pected,” not­with­stand­ing weak­ness of the peso which av­er­aged P53.94 against the green­back Septem­ber. “Ex­ports con­tinue to un­der­per­form, post­ing a two per­cent con­trac­tion YTD af­ter the -2.6% in Septem­ber. In turn, the weaker cur­rency may have con­trib­uted to im­ported in­fla­tion as now more ex­pen­sive im­port costs are passed on to the con­sumer,” Mr. Mapa said in a note on Wed­nes­day.

The Na­tional Eco­nomic and De­vel­op­ment Au­thor­ity (NEDA) at­trib­uted im­ports’ surge to grow­ing pur­chases of cap­i­tal goods which ac­counted for 30.2% or $2.95 bil­lion of the im­port bill in Septem­ber, sus­tain­ing a dou­bledigit in­crease for six straight months. The seg­ment went up 25.4% from $2.35 bil­lion from the same month last year. Year-to-date, im­ported cap­i­tal goods went up to $26.24 bil­lion from $22.55 bil­lion. “The growth in im­port of cap­i­tal goods could in­di­cate that firms are mak­ing long-term in­vest­ments,” NEDA quoted its direc­tor-gen­eral, So­cioe­co­nomic Plan­ning Sec­re­tary Ernesto M. Per­nia, as say­ing in a state­ment on Wed­nes­day.

Con­tin­ued strong ac­qui­si­tion of cap­i­tal goods and raw ma­te­ri­als will drive over­all im­ports “to re­main el­e­vated un­til 2019,” Mr. Per­nia said.

NEDA at­trib­uted ex­ports’ drop to “weak global growth”, say­ing: “Down­ward ad­just­ments in eco­nomic growth fore­casts sig­nal that global growth may have al­ready peaked. Global growth is seen to re­main on the pos­i­tive but to de­cel­er­ate and be un­even across coun­tries.”

Septem­ber saw sales of man­u­fac­tured goods ac­count for 85% of ex­ports at $4.95 bil­lion, slip­ping 1.9% from $5.05 bil­lion a year ago.

Out­bound ship­ments for min­eral prod­ucts slid 30.8% to $263.27 mil­lion from $380.39 mil­lion in the same com­par­a­tive months.

Rizal Com­mer­cial Bank­ing Corp. Econ­o­mist Michael L. Ri­cafort ex­pects mer­chan­dise trade deficit to breach the $4 bil­lion mark within the year amid gov­ern­ment’s ag­gres­sive in­fra­struc­ture spend­ing as well as an an­tic­i­pated boost in for­eign di­rect in­vest­ments. “There is a chance for trade deficit to post a new monthly record high be­yond $4 bil­lion if the gov­ern­ment’s in­fra­struc­ture spend­ing, es­pe­cially on mega in­fra­struc­ture projects (Build Build Build) con­tin­ues to ac­cel­er­ate in the com­ing months and if the growth in real es­tate and con­struc­tion con­tin­ues to sus­tain, lead­ing to higher im­ports of steel/met­als and other con­struc­tion-/real es­tate-re­lated in­puts,” Mr. Ri­cafort said in an e-mail, not­ing that Septem­ber marked the sec­ond straight month that im­ports posted a record high.

“Con­tin­ued growth in FDIs could also lead to wider trade deficits due to the need to im­port more cap­i­tal equip­ment and other im­ported in­puts needed to com­plete pro­duc­tion fa­cil­i­ties.”

For ING Bank’s Mr. Mapa, “the cur­rent ac­count will likely re­main in deficit with the Philip­pine peso look­ing to struc­tural flows such as re­mit­tances ahead of the hol­i­day sea­son and the cap­i­tal and fi­nan­cial ac­count for sup­port.”

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