Domestic trade slumps by 25.5% in the third quarter

Trade in domestic goods declined 25.5% in the third quarter to PHP 181.460 billion as the country’s inflation rate moved at a faster pace, according to the Philippine Statistics Authority (PSA) on Friday.

According to the PSA’s preliminary Commodity Flow in the Philippines report, the volume of trade in the third quarter declined from a year earlier to 4.12 million tons, lower than the 4.86 million tons the previous quarter and the 5.23 million tons a year earlier.

Commodity flow includes all goods transported by water, air, and rail transport, with shipping accounting for the bulk of the commodities.

“The year-on-year decline in volume and in pesos may have to do with higher prices/inflation that partly weighed on demand, weaker peso exchange rate especially earlier this year that added to importation costs and overall inflation, and higher interest rates that somewhat slowed down investments and other economic activities, including domestic trade,” Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said in a Viber message.

Headline inflation in November surged to 8%, the fastest since the 9.1% pace recorded during the Global Financial Crisis in November 2008.

Six out of 10 commodity categories monitored by the PSA reported a decline in trade by value. Among the commodities which reported a contraction were: food and live animals (-20.8%); animal and vegetable oils (-13.3%); chemicals and related products (-52.8%); manufactured goods classified chiefly by material (-1%); machinery and transport equipment (-0.9%); and miscellaneous manufactured articles (74.7%).

Growth was seen in commodities led by crude materials, inedible, except fuels which posted a 279.9% expansion. This was followed by mineral fuels, lubricants and related materials (10.8%), beverages and tobacco (5%), and commodities and transactions not classified elsewhere in the PSCC (0.5%).

Central Visayas remained the top source and destination of commodities in the third quarter with outflows amounting to PHP 45.915 billion and inflows PHP 38.736 billion, for a surplus of PHP 7.179 billion.

Northern Mindanao registered the highest trade balance in the third quarter amounting to PHP 30.293 billion, with outflows recorded at PHP 40.487 billion. This was followed by the MIMAROPA region with a PHP 12.482 billion trade balance, with an outflow of PHP 13.823 billion. Central Luzon’s trade balance amounted to PHP 7.938 billion.

The trade balance is the difference between the outflow value and inflow value.

“Domestic trade should continue to enjoy robust growth in the coming months, mirroring the rise in economic activity post lockdowns,” ING Bank NV Manila Senior Economist Nicholas Antonio T. Mapa said in a Viber message. — Mariedel Irish U. Catilogo