Trade gap narrows to $2.47 B in June

The country’s trade deficit narrowed to $2.47 billion in June as exports continued to grow while imports declined further, the Philippine Statistics Authority (PSA) said yesterday.

The trade gap last June was lower than the $3.55 billion deficit registered in June 2018.

Total external trade in goods in June amounted to $14.49 billion, a decrease of 5.8 percent from $15.39 billion in the same month in the previous year. Exports, making up 41.5 percent of total, were valued at $6.01 billion, while imports accounted for $8.48 billion.

Outbound shipments grew by 1.5 percent in June from $5.92 billion in June 2018. PSA attributed this to increased exports of cathodes, fresh bananas, ignition wiring sets used in vehicles, gold, electronic products, machinery and transport equipment and mineral products.

By commodity group, electronics remained the country’s top export with total earnings of $3.45 billion, making up 59 percent of total export revenues in June. This was higher by 4.3 percent from total sector earnings of $3.40 billion in June 2018.

Imports, meanwhile, declined by 10.4 percent from $9.47 billion in June 2018. PSA noted diminished inbound shipments of iron and steel, cereals and cereal preparations, industrial machinery and equipment, plastics, transport equipment, telecommunication equipment and electrical machinery, mineral fuels, food and live animals, and miscellaneous manufactured articles.

Inbound shipments of raw materials and intermediate goods, which made up 36.5 percent of total imports, declined by 16.5 percent to $3.09 billion in June 2019 from $3.70 billion a year earlier.

Imports of capital goods and consumer goods likewise fell in June.

The US remained as the top destination for Philippine exports, absorbing 16.2 percent of the country’s total outbound shipments in June with exports valued at $974.36 million.

Other major export trading partners were Japan, $874.18 million; China, $824.85 million; Hong Kong, $812.53 million; and Singapore, $336.24 million.

China was the country’s biggest supplier of imported goods with 22.8 percent share to total imports in June 2019. Import payments from this country reached $1.93 billion, from $2.01 billion in June 2018.

Other major import trading partners were Japan, $822.60 million; Republic of Korea, $678.10 million; US, $602.98 million; and Thailand, $521.37 million.

The National Economic and Development Authority (NEDA) attributed the weakness in external trade to the ongoing global trade disputes, Brexit-related uncertainties, and rising geopolitical tensions.

“Despite the challenging external environment, the Philippines has shown resilience in its trade performance. The Philippines is among the countries in Asia with positive export growth,” said Socioeconomic Planning Secretary Ernesto Pernia.

In terms of exports earnings, only Vietnam and the Philippines registered gains among selected Asian economies (China, India, Indonesia, Malaysia, Philippines, Singapore and Thailand).

“The government must continue promoting the competitiveness of the Philippine exports by implementing policies and laws such as the Philippine Innovation Act. This will encourage innovation that will reduce the cost of production and elevate the quality of Philippine products to meet international standards,” Pernia said.

Considering the weak global demand, Pernia noted the need to diversify markets and boost domestic demand to compensate for the weakness in external trade.

Establishing new trade relations and improving existing ones with strategic partners are also needed at this point.

“In light of the current trade spat between Korea and Japan, we need to complete the negotiations for the free trade agreement with South Korea and review the decadeold Philippines-Japan Economic Partnership Agreement to further expand the country’s exports in both markets,” Pernia said.