PH trade deficit doubles to $24.92 billion in 2016

Imports grow 14.2% to $81.159 B; exports shrink 4.4% to $56.232 B

The country’s merchandise trade grew 5.8 percent last year backed by double-digit growth of imports that offset exports decline, according to the National Economic and Development Authority (NEDA).

Based on a report by the Philippine Statistics Authority, the full-year 2016 total trade reached $137.4B, with the 14.2 percent growth in imports mitigating the 4.4 percent decline in exports.

Total merchandise exports for the whole year registered a 4.4 percent contraction to $56.232 billion from $58.827 billion in 2015. Total imports, on the other hand, increased by 14.2 percent to $81.159 billion in 2016 compared to $71.067 billion in 2015.

As a result, the whole trade deficit in 2016 doubled to $24.92 billion from $12.24 billion in 2015

Unlike other many of its neighbors, the Philippines isn't reliant on exports to drive economic growth and actually uses imported goods as raw materials for the export industry and to support domestic needs.

China remained the biggest source of imports, increasing 9.7% on year in December to $1.26 billion. With the Philippines' exports to China in December up 37% on year to $602.8 million, Manila suffered a $656.9 million trade deficit with Beijing during the month.

Japan was the Philippines' biggest export market in December, with shipments rising 2.8% on year to $946.3 million while imports surged 48% on year to 915.3 million. Manila enjoyed a trade surplus of $30.99 million with Japan in December.

Imports from the US increased 28% to $785.2 million while exports from the Philippines declined 6.7% on year to $685.9 million. Manila suffered a trade deficit of $99.2 million against the US for December.

Socioeconomic Planning Secretary Ernesto M. Pernia said in a statement the country needs to continue diversifying and exploring new markets, in addition to fully tapping our existing trade agreements to push further our upward trajectory,”

Meanwhile, growth in December 2016 reached 12.9 percent ($12.9 billion) backed by the rebound in exports (4.5 percent) and continued increase in imports (19.1 percent).

In the same period, export earnings jumped to US$4.9 billion propelled by positive growth in all major commodities, led by agro-based products, petroleum and mineral products, and manufactured goods. “This demonstrates the recovery of our agricultural sector from the effects of the El Niño. It also indicates the positive contributions of mining and petroleum to the economy,” Pernia said.

“This implies that we will have to find a wholesome balance between mining development and environmental protection” the Cabinet official added.

Also, import payments grew to US$7.4 billion due to the expanding demand for capital goods, consumer goods, and raw materials and intermediate goods, despite the drop in mineral fuels and lubricants.

Moreover, the country’s increase in exports receipts from its neighbors, largely from China (36.6 percent) and Taiwan (10.5 percent), was able to offset the decline from other markets.

Only Vietnam and the Philippines posted positive gains for the 2016 merchandise trade as other selected Asian countries remained weak.

“If we want to continue being in the forefront, we need to create policies that enhance and expand opportunities for industries, expand our infrastructure, and shift to a knowledge-based economy,” Pernia said.

“We also need to push for reforms that will sustain growth such as the comprehensive tax reform package, which could provide additional impetus to consumption and investment,” he added.