Trade deficit narrows steeply in October

MANILA, Philippines — The country’s trade deficit narrowed by 26.4 percent year-on-year in October as exports grew minimally and imports posted a double-digit reduction, the Philippine Statistics Authority (PSA) reported yesterday.

The PSA’s parent agency, the National Economic and Development Authority (NEDA), said this could be taken as an indication that exports “will remain relatively steady despite the global slowdown associated with the US-China trade war.”

External trade in goods in October amounted to $15.89 billion, down by 6.7 percent from $17.03 billion in the same month the previous year.

Out of the total external trade, $6.32 billion (39.8 percent) were exports and $9.57 billion (60.2 percent) were imports.

The balance of trade thus registered a $3.25 billion deficit in October 2019, lower by 26.4 percent from the $4.42 billion gap in October 2018.

Export sales grew by merely 0.1 percent in October to $6.32 billion from $6.31 billion in the same month last year, reversing the previous month’s decline.

Upticks in earnings were registered in agro-based products, mainly fruits and vegetables, as well as in manufactured goods.

Outbound shipments of electronic products, which account for 56.1 percent of total exports, grew by seven percent to $3.54 billion from $3.31 billion last year.

Imports, on the other hand, contracted by 10.8 percent to $9.57 billion in October from $10.72 billion in October 2018.

Reduced orders were seen for raw materials, intermediate goods, capital goods, mineral fuels and consumer goods.

As imports are directly related to production of goods for exports, NEDA stressed the need to explore alternative production strategies and implement consistent branding strategies needed to boost the presence of Philippine products in the global market.

Refocusing market strategies towards design-centric and quality-driven products should be done for Philippine products to make its make its mark in international markets.

Socioeconomic Planning Secretary and NEDA chief Ernesto Pernia also said the country needs to manage and counter external risks emanating from trade tensions in advanced economies.

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

To counter external risks, Pernia underscored the need to improve competitiveness through policies  that facilitate and bring down the cost of doing business.

Among the country’s major trade partners, the US was the top destination of Philippine exports as of October with shipments to this country grew by 7.9 percent. Other major export trading partners were Japan, Hong Kong, China and Korea.

China, meanwhile, was the country’s top source of imports in October. Other major sources of imports were Japan, Korea, US and Thailand.