PH trade deficit hits $2.79B in Feb
Credit to Author: ANNA LEAH E. GONZALES| Date: Thu, 11 Apr 2019 16:23:33 +0000
The country’s trade deficit increased to $2.79 billion in February from the $2.54 billion recorded a year earlier as imports continued to outpace exports, the Philippine Statistics Authority (PSA) reported on Thursday.
February’s figure, however, was lower compared to the $3.76-billion deficit in January.
The PSA said inbound shipments grew by 2.6 percent to $7.97 billion year on year while exports contracted 0.9 percent to $5.18 billion.
Electronic products remained the country’s top export with earnings amounting to $2.92 billion, up by 0.8 percent.
However, lower sales of metal components, gold, machinery and transport equipment, other manufactured goods, ignition wiring set and other wiring sets used in vehicles, aircrafts and ships weighed on overall exports growth.
The increase in imports, meanwhile, was traced to transport equipment, cereals and cereal preparations, mineral fuels, lubricants and related materials, other food and live animals, and telecommunication equipment and electrical machinery.
Total external trade in goods amounted to $13.14 billion, up by 1.2 percent from $12.99 billion a year ago.
HSBC Global Research economist Noelan Arbis said the narrower trade balance could also be attributed to a national government budget impasse.
“The delayed budget has forced the Duterte administration to spend on a reenacted 2018 budget, which prevents it from embarking on new infrastructure programs. This has led to a decline in capital goods and raw material imports, which have been the biggest drivers of the Philippine trade deficit in recent years,” he said in a statement.
“We are likely to see a narrower trade deficit for the remainder of 1H19 (first half 2019), as a ban on new government spending remains in effect until the midterm elections on May 13,” Arbis added.
This will also likely to lead to a narrower current account deficit for 2019, which HSBC expects to decline to 2.2 percent of GDP from 2.4 percent in 2018.
ING Bank Manila senior economist Nicholas Antonio Mapa, meanwhile, said the US-China trade war would also have an effect on Philippine exports.
“The ongoing trade war means that the Philippine export sector will need to continue to build on sector-changing reforms to help boost productivity, by enhancing supply chains and increasing standards while hoping that a weaker currency can buy them some time to stay afloat until the true export renaissance,” Mapa said in a separate statement.
“Until then, our fundamental view of trade deficits will continue to exert a deprecation bias on the PHP (Philippine peso) but with the slowdown in capital goods and raw material imports, trade deficits may not be as pronounced and current account gaps will likely improve in the coming months,” he added.
The National Economic and Development Authority (NEDA), meanwhile, said the government remained committed to improving relations with trading partners.
“In its effort to strengthen bilateral economic relations, the Department of Trade and Industry recently concluded dialogues with the UK, Hungary, and Czech Republic,” NEDA officer-in-charge Adoracion M. Navarro said in a statement.
“For the recovery in exports performance, facilitating easier movement of goods is crucial,” she added.
The NEDA official said a joint administrative order was expected to be released later this month to institutionalize measures that will address concerns over high shipping fees and congestion at the Port of Manila and the Manila International Container Port.
“While these are positive developments, further actions such as the optimization of the use of the country’s other major ports in Batangas and Subic, and streamlining the BOC’s processes are still necessary,” she added.
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