Trade-in-goods deficit widens to USD 4.3B in June

The Philippines’ trade-in-goods deficit ballooned to USD 4.3 billion in June as imports and exports contracted, the Philippine Statistics Authority (PSA) said on Tuesday.

Preliminary data from the PSA showed that the country’s trade-in-goods balance — the difference between exports and imports — stood at a USD 4.3-billion deficit in June, 9.3% bigger than the USD 3.94-billion gap in the same month last year.

Month on month, the June trade gap shrank from the USD 4.71-billion deficit in May.

For the first six months of the year, the trade deficit narrowed by 9.5% to USD 25 billion.

The country’s balance of trade in goods has been in the red for 109 straight months (nine years) or since the USD 64.95-million surplus in May 2015.

In June, the value of exports slumped by 17.3% to USD 5.57 billion from USD 6.73 billion a year ago, the first double-digit decline since November 2023. Month on month, exports slid by 12%.

This was the lowest export value in 13 months or since USD 4.92 billion in April last year.

Year to date, exports rose by 3% to USD 36.41 billion.

On the other hand, the value of imports declined by 7.5% year on year to USD 9.87 billion in June from USD 10.67 billion in the same month a year ago. Month on month, it dropped by 10.6%.

The value of imports was the lowest since USD 9.57 billion in March, the PSA said.

For the first six months, imports slipped by 2.5% to USD 61.41 billion.

“Exports are among one-year lows and imports also near one-year lows amid slower economic conditions in China, the world’s second-biggest economy and among the country’s biggest trading partners,” Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said in a Facebook Messenger chat.

The Development Budget Coordination Committee projects 5% and 2% growth in exports and imports, respectively, this year.

DROP IN ELECTRONICS EXPORTS
Among major types of goods, manufactured goods exports dropped by 21.1% year on year to USD 4.34 billion in June but still made up the bulk or 78% of the total. Exports of mineral products slipped by 7.7% to USD 632.4 million.

By commodity group, exports of electronic goods fell by 24.4% to USD 2.99 billion in June from USD 3.96 billion a year ago. Electronic products accounted for 53.7% of the country’s total exports in June. Among electronic products, semiconductor exports slid by 29.5% to USD 2.32 billion in June.

Exports of other manufactured goods dropped by 17.36% year on year to USD 285.56 million, accounting for 5.1% of total exports.

Exports of other mineral products slipped by 16.4% to USD 252.03 million in June.

The United States remained the top destination for Philippine-made goods, with exports valued at USD 897.8 million. This made up 16.1% of the country’s total exports in June.

Hong Kong was the second-biggest market for Philippine exports with a value of USD 886.64 million (15.9% share), followed by China with USD 868.44 million (15.6%), Japan with USD 746.97 million (13.4%) and South Korea with USD 240.26 million (4.3%).

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

IMPORTS

Meanwhile, imports of raw materials and intermediate goods declined by 10.3% to USD 3.54 billion in June. This accounted for 35.9% of the total imports in June.

Imported capital goods slipped by 8.8% to USD 2.82 billion, while imports of consumer goods went down by 7.3% to $1.9 billion.

In terms of value, electronics had the highest import value at USD 2.23 billion in June, up by 5.3% from last year. It made up 22.6% of the total imports in June.

Imports of mineral fuels, lubricants and related materials rose by 2.2% year on year to USD 1.57 billion in June, while transport equipment slid by an annual 36% to USD 787.92 million.

George N. Manzano, who teaches political economy at the University of Asia and the Pacific, said the lower imports of transport equipment could be attributed to the weaker peso.

The peso weakened by 13.4 centavos to close at P58.66 at end-June from its P58.52 finish at end-May.

“Because capital goods and raw material imports are indicators of future production, this may mean weaker production in the near future,” Mr. Manzano said in a Viber message.

In June, China was the biggest source of imports valued at USD 2.6 billion, accounting for 26.3% of the total import bill.

It was followed by Indonesia with imports valued at USD 861.69 million (8.7% share), Japan with USD 763.2 million (7.7%), South Korea with USD 715.14 million (7.2%) and the United States with USD 658 million (6.7%). – Beatriz Marie D. Cruz, Reporter