The Philippine trade deficit widened by 23.1% year-on-year (YoY) to USD 3.68 billion in February. This brings the year-to-date trade deficit to USD 7.96 billion, only 0.1% wider than in the first two months of last year.

•  Imports growth outpaced exports growth for the first time in 10 months, as exports slowed and imports picked up.
• Exports growth decelerated to 8.0% YoY in February, led by electronic exports, particularly semiconductors.
• Meanwhile, imports grew by 12.6% YoY, led by capital goods. The double-digit YoY increase in total imports is a reversal from the contraction in the preceding month.

• Metrobank anticipates that exports growth may be capped by slower global demand amid the ongoing US-Iran conflict. Meanwhile, imports strength may be weakened as business sentiment wanes amid heightened global uncertainty.
• Considering expectations of relatively weaker imports and higher import costs, the trade deficit could further widen year-on-year and could put pressure on the peso.
• For those with impending requirements, it may be strategic to pick up on US dollars ahead of the imports season in the second to third quarter.

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