Trade gap widens to USD 4.38 billion in August

The Philippines’ trade gap widened year on year in August as growth in imports still outpaced the increase in exports, even as the value of outbound shipments was the highest in 11 months, the government reported on Thursday.

Preliminary data from the Philippine Statistics Authority showed that the country’s trade-in-goods balance — the difference between exports and imports — stood at a USD 4.375-billion deficit in August, 6.6% bigger than the USD 4.105-billion gap in the same month last year.

However, month on month, the trade gap shrank by 10.25% from the USD 4.88-billion deficit posted in July.

Year to date, the trade deficit narrowed by 4.35% to USD 34.3 billion from the USD 35.86-billion gap a year ago.

The country’s balance of trade in goods has been in a deficit for 111 straight months (over nine years) or since the USD 64.95-million surplus recorded in May 2015.

Total external trade in goods amounted to USD 17.87 billion in August, up 1.8% year on year. Of the total, 62.2% was imported goods, while the remaining 37.8% was made up of exports.

In August, export sales inched up by 0.3% to USD 6.75 billion from USD 6.73 billion in the same month in 2023, logging a second straight month of increase.

This was the biggest export value in 11 months or since the USD 6.77 billion in September last year.

Month on month, exports increased by 7.97%.

In the first eight months of the year, exports grew by an annual 2.27% to USD 49.41 billion.

Pantheon Macroeconomics Chief Emerging Asia Economist Miguel Chanco said in an e-mail that the rebound in exports seen since July “has been driven primarily by a comeback in demand from nontraditional markets and, to a smaller extent, recovering shipments to both the US and Japan.”

“By contrast, exports to China and Hong Kong have remained essentially flat in comparison.”

Meanwhile, the value of imported goods rose by 2.7% to USD 11.12 billion in August from USD 10.83 billion a year prior. Month on month, imports inched down by 0.02%.

Year to date, imports declined by an annual 0.55% to USD 83.7 billion.

Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort attributed the year-on-year increase in August imports to the peso’s appreciation versus the dollar.

“The faster growth in imports compared to exports may be partly attributed to the stronger peso exchange rate that made imports cheaper from the point of view of the locals, thereby increasing demand,” he said in a Viber message.

The stronger peso also made Philippine exports more expensive for international buyers, thus leading to a wider deficit, Mr. Ricafort added.

The peso closed at P56.111 versus the dollar at end-August, stronger by PHP 2.254 from its PHP 58.365 finish the previous month.

The Development Budget Coordination Committee (DBCC) projects 3% and 4% growth in exports and imports, respectively, this year.

KEY EXPORTS DECLINE

Manufactured goods, which accounted for 81.2% of the country’s export receipts, slipped by 0.6% to USD 5.48 billion in August from USD 5.51 billion a year ago.

Electronic products, which made up most of manufactured exports, declined by 8.2% year on year to USD 3.57 billion in August.

Semiconductor exports likewise dropped by 13.8% to USD 2.69 billion in August. Exports of mineral products slumped by 13.4% to USD 582.36 million.

The United States remained the top destination of Philippine-made goods in August with an export value of $1.22 billion, accounting for 18.1% of the total.

This was followed by Hong Kong with USD 942.56 million (14% of the total), Japan (USD 935.33 million or 13.9%), China (USD 849.38 million or 12.6%) and South Korea (USD 332.64 million or 4.9%). Other top export markets include the Netherlands, Singapore, Taiwan, Germany, and Thailand.

IMPORTS

Meanwhile, imports of raw materials and intermediate goods grew by 5.2% year on year to $4.06 billion in August. This made up 36.5% of total imports.

Imported capital goods picked up by 9.6% annually to USD 3 billion, while imports of consumer goods was steady at $2.24 billion.

Imports of mineral fuels, lubricants and related materials slid by 9.1% to USD 1.79 billion in August.

“Real import demand is still wobbling, with purchases of consumer goods remaining stagnant, at best, while demand for imported capital goods remains depressed,” Mr. Chanco said.

China was the biggest source of imports valued at USD 2.79 billion, accounting for a quarter of the total import bill in August.

It was followed by Indonesia (USD 972.4 million or 8.7% of the total), South Korea (USD 925.36 million or 8.3%), Japan (USD 827.11 million or 7.4%) and the United States (USD 707.33 million or 6.4%). – Beatriz Marie D. Cruz, Reporter