Philippine Daily Inquirer

Trade gap narrowed in Oct

Imports post biggest decline in 7 months while exports inch up

- By Ben O. de Vera @bendeverai­nq

Merchandis­e exports slightly recovered while imports continued to decline year-onyear for the seventh straight month in October, allowing the peso to strengthen.

The latest preliminar­y Philippine Statistics Authority (PSA) data showed that sales of Philippine-made goods abroad inched up 0.1 percent year-on-year to $6.3 billion last October, reversing the decline posted in September.

In a statement, the state planning agency National Economic and Developmen­t Authority (Neda) attributed October’s higher export

receipts to the “uptick in earnings from agro-based products, mainly fruits and vegetables, and manufactur­ed articles.”

However, the value of imported goods that came into the country dropped 10.8 percent year-on-year to $9.6 billion in October—the fastest pace recorded during the seven consecutiv­e months of contractio­n.

Neda blamed “reduced orders for raw materials and intermedia­te goods, capital goods, mineral fuels, and consumer goods” for the continuous drop in imports.

ING Bank Manila senior economist Nicholas Antonio T. Mapa said “the sustained pullback in capital machinery and raw materials imports reflects a worrisome trend with potential

productive capacity likely curtailed by previous policy tightening and the 2019 budget delay.”

Total two-way trade declined 6.7 percent year-on-year to $15.9 billion last October, even as the trade-in-goods deficit narrowed by over a fourth to $3.3 billion from $4.4 billion a year ago.

Compared with September, total trade inched up from $15 billion, Neda noted.

“The modest [month-onmonth] recovery in the country’s trade figures for October backs the expectatio­ns that the export sector will remain relatively steady despite the global slowdown associated with the Us-china trade war. This also aligns well with the country’s overall GDP (gross domestic

product) growth target of 6 to 7 percent for 2019,” Socioecono­mic Planning Secretary and Neda chief Ernesto M. Pernia said.

Pernia said “possible downside risks, particular­ly the lingering vulnerabil­ities and spillovers associated with the trade tensions, need to be managed.”

Mapa nonetheles­s pointed out that the weak imports that narrowed the trade and current-account deficits, in turn, allowed the peso to gain strength.

“The 11-percent narrowing of the year-to-date trade deficit has helped provide some support for the peso for most of the year. In the short term, the peso will continue to enjoy an appreciati­on bias on holiday remittance flows and

the narrowing trade gap,” Mapa said.

“However, increased demand for foreign currency coupled with a projected easing from the Bangko Sentral ng Pilipinas (BSP) in February 2020 will likely see an end to the recent strengthen­ing bias for the peso as early as the first quarter of 2020,” Mapa added.

Security Bank chief economist Robert Dan J. Roces was hoping for recovery in both exports and imports as the Christmas season approached.

“We see exports growing by 1-2 percent and imports probably turning to near positive territory in the last two months of 2019 on the back of seasonal stockpilin­g for the holiday season and the start of the new year. For 2020, we see import growth improving due to a government expenditur­e program powered by a spending stimulus, and exports to recover on a bounce back from a partial trade war agreement, if at all,” Roces said.

Newspapers in English

Newspapers from Philippines