The country recorded a trade deficit of USD 4.512 billion in March, only 0.1% wider year-on-year (YoY) as more expensive oil prices weigh on overall trade. Year-to-date, the Philippine’s total trade deficit stands at USD 12.805 billion, wider by 2.8% YoY.

Key points
 

• Philippine trade deficit widened in March as imports growth outpaced the growth in exports. Both exports and imports grew faster than Bloomberg consensus estimate.
• The surge in oil prices weighed heavily on the surge for both exports and imports, and the overall wider trade deficit in March.
• Exports growth accelerated to 20.4% YoY in March. Meanwhile, imports grew by 12.3% YoY. Both were led by imports and exports of electronic exports.

Metrobank's take

• Higher shipping costs, driven by elevated oil prices, are likely to continue weighing heavily on overall global trade activity. Moreover, higher peso spot rates are also expected to continue being factored into overall trade.
• Metrobank projects that weaker export demand amid a bleak global economic outlook and more expensive imports on higher peso spot rates would result in a wider trade deficit.
• Continue to stay defensive with an average duration within 2-5 years. Yields in the belly have risen by an average of 32 basis points (bps) week-on-week and we see relative value in 4-year bonds which are trading 30 bps above the 1- to 3-year bonds and remain flat versus 7-10 year bonds. However, also consider opportunities to scale into the 7-year area on market reluctance to go into longer tenors and as yields steadily approach highs last seen in 2024.
• For local equities, remain defensive amid persistent macro headwinds, while selectively accumulating fundamentally strong names—particularly in banking, utilities, and consumer sectors—on market pullbacks. Buy near support at 5,850 and take profits around 5,950-6,050.