September trade deficit widest in 20 months

The Philippines’ trade-in-goods deficit ballooned to USD 5.09 billion in September, the biggest trade gap in 20 months, the Philippine Statistics Authority (PSA) said on Wednesday.

Preliminary data from the PSA showed the trade-in-goods balance — the difference between exports and imports — stood at a USD 5.09-billion deficit in September, up by 43.4% from USD 3.55-billion gap a year ago.

Month on month, the trade gap rose by 15.81% from USD 4.39 billion in August.

The country’s balance of trade in goods has been in the red for 112 straight months (over nine years) since the USD 64.95-million surplus recorded in May 2015.

In September, exports declined 7.6% to USD 6.26 billion from USD 6.77 billion a year ago. This was the biggest drop since June.

For the first nine months, exports rose by 1.1% to USD 55.67 billion.

The Development Budget Coordination Committee (DBCC) expects 5% growth in exports this year.

On the other hand, the value of imports went up by an annual 9.9% to USD 11.34 billion in September from USD 10.32 billion in the same period last year.

In the nine-month period, imports inched up by 0.6% to USD 95.07 billion. This is below the DBCC’s target of 2% growth in imports for the year.

Electronic exports

Among the major types of goods, exports of manufactured goods fell by 11.1% year on year to USD 4.95 billion in September, followed by mineral products (USD 645.24 million) and agro-based products (USD 492.62 million). Manufactured goods accounted for 79.2% of the total exports in September.

By commodity group, electronic products was still the country’s top exports in September with USD 3.15 billion, down 23.1% from USD 4.09 billion a year ago.

Semiconductor exports, which accounted for the majority of electronic goods, dropped by 30.6% to USD 2.31 billion in September.

Exports of other manufactured goods increased by 73.7% to USD 506.69 million, while other mineral products rose by 16.2% to USD 330.23 million in September.

The United States remained the top destination of Philippine-made goods, with exports valued at USD 1.08 billion. This accounted for 17.3% of total exports in June.

Hong Kong was the second-biggest market with an export value of USD 867.42 million (13.9% share), followed by Japan with USD 847.47 million (13.5%), China with USD 830.36 million (13.3%), and South Korea with USD 318.50 million (5.1%).

Other top export destinations include Thailand, the Netherlands, Germany, Singapore, and Taiwan.

Imports

By type of goods, imports of raw materials and intermediate goods increased by 19.5% to USD 4.33 billion in September, while capital goods inched up by 1.4% to USD 3.03 billion and consumer goods rose by 20.6% to USD 2.56 billion.

In terms of value, electronic products had the highest import value at USD 2.4 billion in September, up by 8.9% from last year. It made up 21.2% of the total imports in September.

Imports of mineral fuels, lubricants, and related materials slipped 11.4% year on year to USD 1.36 billion in September, while transport equipment also fell by an annual 3.1% to USD 1.12 billion.

In September, China was the biggest source of imports valued at USD 2.84 billion, which made up 25% of the total import bill.

This was followed by Indonesia with USD 1.09 billion (9.6%), Japan with USD 837.75 million (7.4%), South Korea with USD 784.65 million (6.9%), Thailand with USD 735.58 million (6.5%) and the United States with USD 6.298 million (6.7%).

GlobalSource Country Analysts Diwa C. Guinigundo said that the widening trade deficit was due to sluggish exports.

“We are strong in imports, but our exports are not doing very well precisely because the global economy was also not doing very well,” he said in a phone call interview.

“Exports declined because the global economy is not exactly robust, while our imports were driven by the demand for imports of capital goods, raw materials and intermediate products, as well as consumer imports like oil, cars,” he added.

Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said the increase in imports was also due to a stronger peso.

The peso closed at PHP 56.03 per dollar at end-September, strengthening from the PHP 56.111 finish at end-August.

For the coming months, Mr. Ricafort said that the weakening peso would “make imports more expensive from the point of view of local buyers, but would make exports more price competitive from the point of view of foreign buyers.”

“Increased demand other economic activities during the Christmas holiday season would help spur more imports/production activities and export sales,” Mr. Ricafort said. – Aubrey Rose A. Inosante, Reporter