DOF: Lower trade gap to narrow BOP deficit

The lower trade gap recorded as of August this year will help narrow the country’s balance of payments (BOP) deficit, the Department of Finance (DOF) said yesterday.

Finance Undersecretary and Chief Economist Gil S. Beltran said the reduced trade deficit at end-August may reverse the current account shortfall and temper the depreciation of the peso against the US, which will help sustain the government’s goal of investment-led growth.

In the first eight months of 2017, the country’s merchandise trade deficit continued to shrink, declining to 9.2 percent of gross domestic product (GDP), or approximately $17.046 billion.

The end-August figure was lower compared with 9.8 percent of GDP, or $17.501 billion, registered in the same period last year, Beltran said.

In his latest Economic Bulletin on the Trade Balance, Beltran reported to Finance Secretary Carlos G. Dominguez that he also noted that merchandise export sales rose by 13.3 percent to $42.106 billion as of August.

Major export items also grew at double-digits, including electronics, which was up 10.9 percent; machinery and equipment, 27.9 percent; and garments, 16.2 percent.

“Meanwhile, merchandise imports rose by 8.2 percent to $59.15 billion, slowing down from a blistering 18.4 percent growth last year, despite double-digit increases in the imports of capital goods,” Beltran said.

Imports of specialized machinery and office equipment for the period was up 12.7 percent, while machinery and transport equipment rose 11.7 percent the correction in prices of mineral fuels was 34.9 percent.

“The lower trade deficit will moderate the BOP deficit, possibly reverse the current account deficit and temper the peso depreciation,” Beltran said. “This will help sustain investment-led growth.”

Earlier, Socioeconomic Undersecretary Rolando G. Tungpalan said that productivityenhancing reforms were needed to help sustain the improving growth of Philippine trade recorded last month.

The Philippine Statistics Authority had reported that the country’s total trade grew by 10 percent in August this year, a significant jump from July’s 2.5 percent expansion and 1.5 percent in June.