Trade gap widens to USD 54.2 billion in 2024

The Philippines’ trade-in-goods deficit widened in 2024, the largest trade gap in over two years as imports picked up while exports continued to decline, the Philippine Statistics Authority (PSA) reported on Friday.

Preliminary data from the PSA showed the country’s full-year trade balance — the difference between the values of exports and imports — grew by 3.1% year on year to USD 54.21-billion deficit in 2024 from the USD 52.59-billion gap a year earlier.

The latest figures marked the lowest trade gap since the USD 57.65-billion deficit in 2022.

Merchandise exports in 2024 declined by 0.5% to USD 73.21 billion, below the 4% growth projection set by the Development Budget and Coordination Committee (DBCC) for 2024.

A year earlier, exports fell by 7.5%.

Meanwhile, imports rose by 1% year on year to USD 127.43 billion in 2024, picking up from the 8% contraction in 2023. Imports growth missed the DBCC’s 2% growth target.

In December, the country’s trade-in-goods deficit narrowed to USD 4.14 billion from the USD 4.85 billion deficit in November.

This was the smallest trade gap in nine months or since the USD 3.35 billion deficit in March 2024.

Merchandise exports for the month fell by 2.2% to USD 5.66 billion, slower than the 8.6% contraction in November.

By value, export haul in December was the lowest in six months or since the USD 5.57 billion in June 2024.

Likewise, imports contracted by 1.7% to USD 9.79 billion, slower than the 4.1% drop a month earlier.

Import value was the lowest in nine months or since USD 9.57 billion in March 2024.

“For the last few years, both exports and imports were quite weak and hardly drivers of economic growth,” said Diwa C. Guinigundo, country analyst at GlobalSource Partners.

Mr. Guinigundo added that on a net basis, external trade contributes minimal impact on the economy.

“Weak exports are overshadowed by higher imports even as they have been quite sluggish recently, [while] modest imports are also indicative of weak manufacturing and business activities,”Mr. Guinigundo said in a Viber message.

Additionally, he noted that over the last two years, the Philippine economy saw some slowdown, falling behind the lower end of the growth targets.

In 2023, the Philippine economy grew by 5.5%, significantly slower than the 7.6% expansion in 2022.

This was the weakest growth in three years since the 9.5% slump in 2020.

The PSA will be reporting the fourth quarter and full-year gross domestic product on Jan. 30, Thursday.

Manufactured goods, accounting for more than three-fourths of exports, went down by 2.6% to USD 58.34 billion last year.

Electronic products, making up most manufactured goods and more than half of all exports, slumped by 6.7% to USD 39.08 billion. Semiconductors also fell by 13.5% to USD 29.16 billion.

The United States remained the top destination for Philippine-made goods in 2024, with exports valued at USD 12.12 billion or 16.6% of total export sales.

It was followed by Japan with USD 10.33 billion (14.1% share), Hong Kong with USD 9.6 billion (13.1%), China with USD 9.44 billion (12.9%), and South Korea with USD 3.57 billion (4.9%).

Imports of capital goods inched down by 0.1% to USD 35.7 billion.

On the other hand, imports of raw materials and intermediate goods rose by 2% to USD 46.35 billion.

Imports of consumer goods also climbed by 5.6% to USD 25.81 billion, while imports of mineral fuels, lubricants and related materials declined by 5.2% to USD 19.06 billion.

By commodity group, electronic products had the highest import value at USD 27.37 billion in 2024, up 2.7% from USD 26.64 billion a year ago.

China was the biggest source of imports for the year with USD 32.81 billion worth of goods, accounting for 25.8% of the total import bill.

It was followed by Indonesia with USD 10.55 billion (8.3% share), Japan with USD 10.07 billion (7.9%), South Korea with USD 9.63 billion (7.6%) and United States with USD 8.17 billion (6.4%).

Jesus L. Arranza, chairman of Federation of Philippine Industries, said in a phone call that illicit trade and imports for consumer goods like rice and sugar contributed to the widening of the gap for the year.

He added that the increase in smuggling in the country has led to the decline in domestic manufacturing.

“The president would like to stabilize the price of rice, the price of sugar… There is our desire, also, to bring down prices for the consumers. Because the consumers have already made noise,” he said in a mix of Tagalog and English.

Mr. Arranza also said that the narrowing of the gap in December was due to goods already being delivered during the October-November period, anticipating the end of the season.

Mr. Guinigundo said that while it is good that US tariff increases will not be applied on Philippine exports, they could affect Philippine exports to China, which participates in the Southeast Asian country’s semiconductor market.

“This would require a rethink of Philippine exporters on their market focus,” Mr. Guinigundo said. — Pierce Oel A. Montalvo