Trade gap narrows in July
MANILA, Philippines — The Philippines’ trade gap in July narrowed year-on-year but widened from June's level on falling imports and slight export growth, the country’s statistics agency reported Tuesday.
Trade deficit in July stood at $3.39 billion, 15.5% lower than $4.02 shortfall recorded in the same month last year but wider than $2.37 billion gap in June.
A deficit occurs when a country’s imports exceed its exports.
Merchandise exports inched up 3.5% in July to $6.17 billion from $5.97 billion a year ago. Outbound shipment of electronic products — the country’s top export — went up 2.9% year-on-year to $3.43 billion from $3.34 billion.
On the other hand, imports sagged for the fourth straight month in July to $9.57 billion, down 4.2% from $9.98 billion in the comparable period last year on lower purchases of raw materials and intermediate goods, as well mineral fuels, lubricant and related materials.
“Philippine exports remained resilient during the second quarter of 2019 despite the continuing external challenges such trade tensions between the US and China, the bleak outlook in Europe, and the uncertainty of the future of Brexit,” Socioeconomic Planning Secretary Ernesto Pernia said.
“The country’s manufacturing sector is expected to sustain its growth despite the overall decline in global manufacturing. We are optimistic as we see a reduction of global oil prices, the recent cuts in electricity rates, and the lower import costs due to the appreciation of the peso,” Pernia added.
The Philippines has been incurring wide trade gaps since 2017 amid a rise in imports to feed the Duterte administration’s ambitious infrastructure program, reversing the nation’s current account surplus to a deficit and pressuring the peso.
But a four-month delay in the approval of the 2019 budget — which left new projects unfunded earlier this year — disrupted public infrastructure spending, slowing down imports in recent months and helping improve the nation’s trade imbalance.
But some analysts say the less severe trade gap is only temporary, with disbursements seen picking up in the coming months as the government catches up on spending.
"Import growth is likely to recover over the next few months contingent on the expected pick up in government spending," ANZ Research said.
"So far, the pick-up in government spending remains modest and with slowing credit growth, particularly for manufacturing loans, the pace of increase in imports will likely be more moderate than in the past," it added.
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