Trade deficit hits record high $4.21 billion in October 2018

MANILA, Philippines — As imports continued to rapidly outpace exports, the country’s balance of trade swung to a record high $4.21 billion deficit in October, the Philippine Statistics Authority (PSA) reported yesterday.

Based on its latest foreign trade figures, the PSA said the October trade gap widened sharply from $2.59 billion in the same month last year as imports continued to grow at a much faster pace of 21.4 percent to $10.32 billion compared to the mere 3.3 percent growth in exports to $6.11 billion.

For the first 10 months of 2018, the trade deficit increased sharply to $33.92 billion from $20.13 billion in the same period a year earlier.

More than half of the imports during the period were raw materials and intermediate goods, as well as capital goods used as inputs for production.

Posting the strongest growth in inbound shipments were the following commodity groups: cereals and cereal preparations; mineral fuels, lubricants and related materials; other food and live animals; telecommunication equipment, and electrical machinery; miscellaneous manufactured articles; plastics in primary and non-primary forms; industrial machinery and equipment; transport equipment; electronic products; and iron and steel.

Inbound shipment of raw materials and intermediate goods made up 37.7 percent of the total import value, rising 22.2 percent year-on-year to $3.89 billion in October 2018 from $3.18 billion in October 2017.

Imports of capital goods, on the other hand, accounted for 33.6 percent of shipments in October, with value rising 21.2 percent from the October 2017 import value of $2.86 billion.

“The growth in import of capital goods could indicate that firms are making long-term investments. The import of raw materials and intermediate goods could also indicate the vibrancy of the manufacturing sector as it is expected to sustain its positive growth in the remaining months of the 2018,” Socioeconomic Planning Secretary Ernesto Pernia earlier said.

He said import payments are seen to remain elevated until 2019, primarily due to imports of capital goods and raw materials to sustain the government’s Build Build Build infrastructure and manufacturing resurgence programs.

Meanwhile, the PSA said growth in export sales was fuelled by increases in the outbound shipments of seven commodities: copper concentrates, machinery and transport equipment, fresh banana, other manufactured goods, miscellaneous manufactured articles, metal components, and electronic products.

Outbound shipments of electronic products, which saw a marginal growth of 0.6 percent in October 2018, remained the country’s top dollar earner, with total earnings of $3.25 billion, making up 53.2 percent of total export revenues during the reference period.

Top trading partners during the period were the US, Japan, China and Korea.

A trade surplus was registered with the US as exports valued at $996.86 million outpaced imports of $721.71 million in October 2018.

A deficit, on the other hand, was recorded with Japan as the export value of $850.45 million in October fell behind imports of $918.53 million.

China was the biggest supplier of imports during the reference period, with import bills totaling $2.13 billion, resulting in a trade deficit as exports to this country was placed at only $804.53 million during the period.

A wide trade deficit was likewise seen with Korea as imports of $1.08 billion in October greatly outpaced exports of $254 million.