Trade deficit widens 43% in April to $3.62 B

The country’s trade deficit widened to a fourmonth high in April on robust purchases of capital and consumer goods abroad and as weak demand overseas dented exports, the statistics agency said yesterday.

The trade gap swelled 43 percent to $3.62 billion in April versus March as demand for telecommunication and transport equipment, and iron and steel, saw imports rising by a near twoyear high of 22.2 percent.

While the country’s trade recorded strong growth, the National Economic and Development Authority stressed the need for the government to seize the benefits of “existing free trade agreements (FTAs) and forging new ties” to expand the Philippines’ market for exports.

The Philippine Statistics Authority (PSA) reported yesterday that imports growth accelerated to 22.2 percent in April this year after a tepid increase of 0.3 percent in March this year.

NEDA attributed the recovery on increased in inbound shipments of capital goods, raw materials and intermediate goods, consumer goods, and mineral fuels and lubricants.

Exports, meanwhile, fell for a fourth consecutive month in April by 8.5 percent year-on-year owing to the decline in non-electronic manufactured products and agro-based products.

The decline, however, was tempered by a 5.5 percent expansion in exports of electronic products, which accounted for 69.1 percent of total shipments for the month.

The increase in exports of electronic manufactures was led by faster growth of semiconductors (5.3 percent), compared with the 3.1 percent uptick recorded in the previous month, reflecting the global trend as chip sales worldwide continued to grow at a double-digit pace.

With the hefty increase in imports making up for exports’ soft performance, the country’s trade deficit widened to a four-month high in April at 43 percent to $3.62 billion.

“The current turnout of imports is encouraging. But much has to be done to create an environment that is necessary for exporters to thrive. The signing into law of the Ease of Doing Business Act of 2018 is a step in the right direction,” Socioeconomic Planning Secretary Ernesto M. Pernia said.

He explained that the new law could bring down business costs, encourage wider participation among firms, and attract foreign investors — eventually boosting exports in the near to medium term.

In terms of trade facilitation, Pernia said that government efforts are also underway to better link up more agencies to TradeNet, the country’s link to the ASEAN National Single Window, which will enhance intraregional trade.

The NEDA chief said seizing the benefits of existing free trade agreements (FTAs) and forging new ties are equally important to expand the market for exports.

“To make FTAs more beneficial, the government needs to continue to encourage exporters to familiarize themselves with the proper tariff classification of products to find the lowest applicable tariffs as well as apply the rules of origin to avail of zero or lower tariff rates,” Pernia said.

“Enhancing trade relations with the country’s non-traditional partners would also contribute highly to the growth of the exports sector,” he added.

The rise in imports was partly driven by the government’s $180billion program to overhaul the country’s outdated infrastructure to lift economic growth and attract investments.

The import-driven trade gap could worsen the current account deficit, which will put further pressure on the peso, Khoon Goh, head of Asia research at ANZ, said in a tweet.

The peso was hovering near 12-year lows against the dollar after the data was released. It remains Asia’s worst performing currency.

The central bank has forecast a current account deficit of $700 million this year or 0.2 percent of GDP, narrower than last year’s deficit of $2.5 billion, which accounted for 0.8 percent of the country’s gross domestic product (GDP). The 2016 deficit was 0.4 percent of GDP. (CSL and Reuters)