Trade deficit balloons to $29.8B in first half

The Philippines’ balance of trade deficit in the first half widened slightly more than initially reported due to higher import bill, latest data from the Philippine Statistics Authority (PSA) showed.

The trade deficit stood at $29.819 billion in the first semester, slightly higher than the $29.793 billion the agency reported previously. This deficit was also significantly wider than the $17.953 billion recorded in the first six months of 2021.

Exports during the period were kept at $38.527 billion while imports of goods were revised upwards to $68.346 billion (from $68.320 billion reported in August).

Meanwhile, the country’s total trade was revised to $106.874 billion against the earlier estimate of $106.847 billion. 

“Increased trade resulted from the reopening of the economy with mobility restrictions relaxed,” ING Bank N.V. Manila Branch Senior Economist Nicholas Antonio T. Mapa said in an e-mail.

He noted that increased costs for imports due to surging commodity prices pushed up the overall trade.

By major type of goods, manufactured goods still comprised the largest portion in total exports in the first half, accounting for 78.9%. This grew by 2.8% annually to $30.387 billion.

Electronic products, which made up 54.9% of the total export receipts, grew by 4.4% to $21.169 billion.

Semiconductors, which accounted for 41.7% of exports, increased by 7.3% to $16.060 billion.

Exports of mineral products climbed by 28.1% to $4.067 billion in the first six months. These goods accounted for 10.6% of the total exports.

Other mineral products grew by 41.2% to $2.114 billion while other manufactured goods rose 2.6% annually to $1.935 billion.

Meanwhile, imports of raw materials and intermediate goods, which accounted for 38.8% of the total import bill, grew 21.4% to $26.535 billion.

With a 27.9% share of the total, capital goods went up 12% to $19.099 billion.

This was followed by mineral fuels, lubricants and related materials, which accounted for about 17.5% of the total bill, surging 117.7% to $11.975 billion.

In a separate e-mail, Security Bank Corp. Chief Economist Robert Dan J. Roces said that imports improved on the back of sustained local demand on the back of economic reopening.

“However, data from June 2022 hence showed local trade balance go into deeper, record negative territory with international trade getting buffeted by spiking inflation, strong USD, and China’s slowdown. These latter factors we expect to continue pressuring the peso until end of the year,” he added.

China was the country’s main supplier of imported goods amounting to $13.499 billion with a 19.8% of the total imports. This was followed by South Korea which was valued at $6.957 billion with a share of 10.2% of the total and Japan with $6.371 billion, 9.3% of the total.

Meanwhile, the United States was the main destination of the country’s products, with a 15.4% share valued at $5.935 billion. It was followed by China (14.5% at $5.588 billion) and Japan (14.3% at $5.524 billion).

“We expect exports to struggle as global trade slows although imports could sustain gains as the economy continues to expand further,” Mr. Mapa said.

Export and import trade statistics are compiled by the Philippine Statistics Authority (PSA) from export and import documents submitted to the Bureau of Customs by exporters and importers or their authorized representatives as required by law.