Trade gap doubles to $24.9 B in 2016

MANILA, Philippines -  The country’s trade deficit widened to $24.927 billion in 2016 from $12.24 billion a year earlier as manufacturing and consumption-related imports outpaced exports, the Philippine Statistics Authority (PSA) reported yesterday.

Total imports in 2016 reached $81.159 billion, up 14.2 percent from $71.067 billion in 2015. Total merchandise exports, meanwhile, fell 4.4 percent to $56.232 billion from $58.827 billion in 2015.

Due to the widening discrepancy, the National Economic and Development Authority (NEDA) said there is a need to diversify export markets and explore new destinations for local products.

“This means that we need to keep diversifying and exploring new markets, in addition to fully tapping our existing trade agreements to push further our upward trajectory,” said Socioeconomic Planning Secretary Ernesto Pernia, also the director general of NEDA.

In December 2016  alone, total imports  rose 19.1 percent to $7.435 billion from $6.245 billion in the same period a year ago. This was due to increased inbound shipments of capital goods such as transport equipment, power generating and specialized machinery, telecommunication equipment and electrical machinery, industrial machinery and equipment, plastics, iron and steel, as well as electronic products.

Export earnings, meanwhile, rose 4.5 percent in December 2016 to $4.871 billion from $4.660 billion in December 2015 as outbound shipments of the following commodities grew: coconut oil, mineral products, metal components, chemicals and other manufactures.

Increase in exports receipts from China (36.6 percent) and Taiwan (10.5 percent) was able to offset the decline from other markets.

The trade deficit in December, however, rose to $2.564 billion from $1.586 billion in the same period in 2015.

The rise in exports in December reflect the recovery of the agricultural sector from El Niño and reinforces the contributions of the mining and petroleum sectors, Pernia said.

“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. This implies that we will have to find a wholesome balance between mining development and environmental protection” he said.

He also underscored the need to create an environment conducive to industry growth especially for small and medium enterprises.

“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. 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,” Pernia said.