November dive derails trade's V-shaped revival

MANILA, Philippines — Trade’s V-shaped rebound was disrupted in November, a sign of a sputtering recovery exacerbated by the lack of an expected nudge during the Christmas season.

Merchandise trade shrank 10.6% year-on-year to $13.31 billion in November, easing from 11.9% annual contraction in October, but on a month-on-month basis, shipments sagged 7% from October.

Data from the Philippine Statistics Authority showed November marked the first monthly slump since lockdowns were briefly reintroduced in Metro Manila and nearby provinces in August. The latest dive to negative territory was also telling of the economy's persistent weakness as it came ahead of holidays when demand for goods typically ramps up that traders try to meet them.

But, as 2020 had already shown, it was not usual year and consumers continued to shun eating out, shopping or merely going out if unnecessary for fears of catching the deadly coronavirus. Michael Ricafort, chief economist at Rizal Commercial Banking Corp., has more warnings.

“The risk of the new coronavirus strain/variant that is more contagious could lead to slower economic recovery prospects amid lockdowns…, thereby could also lead to slower recovery in both imports, and exports, going forward,” Ricafort said in a commentary.

Broken down, exports surprised with an annual growth of 3% to $5.79 billion, the fastest since January last year, but this was offset by a staggering 18.9% on-year decline in imports. That double-digit dip marked the 19th straight month imports imploded because traders have no impetus to ship in more goods due to lackluster consumption. 

That said, both exports and imports are showing signs they are likely to continue with their current trend. On exports, electronics, which accounted for the bulk of outbound shipments, accelerated growth to 4.6% year-on-year, signaling factories abroad that receive local spare parts have resumed operations. 

On the flip side, imports of capital hoods shrank 15.8% and raw materials down 16.7% year-on-year, in a sign the government’s infrastructure program has yet to take off again. 

With imports exceeding exports, the trade deficit stood at $1.73 billion in November, 55.6% wider year-on-year.

To date, exports were down 11.1%, albeit performing better than imports’ 24.5% slump. Government projected the two to contract 16% and 20%, respectively, last year.