THE COUNTRY’S trade-in-goods deficit widened in October as merchandise import growth outpaced the growth in exports, the Philippine Statistics Authority (PSA) reported on Friday.
Preliminary PSA data showed the value of merchandise exports grew by 2% to $6.41 billion.
The October reading was a turnaround from the 0.9% drop in the same month last year, albeit slower than the 6.4% growth seen in September 2021.
Meanwhile, the country’s merchandise imports rose by 25.1% to $10.43 billion in October. This marked a reversal from the 15.9% contraction in October 2020 but slightly faster than the 24.9% import growth in September 2021.
This brought the trade-in-goods deficit to $4.02 billion in October, wider than the $2.05-billion shortfall recorded in the same month last year, as well as the $4 billion gap in September.
Year to date, the trade balance ballooned to a $33.21-billion deficit, from a $20-billion gap during the same period in 2020.
For the 10-month period, exports and imports jumped by an annual 16.1% (to $62.10 billion) and 29.7% (to $95.31 billion), respectively. These surpassed the Development Budget Coordination Committee expects exports and imports to rise by 10% and 12% this year.
By commodity group, exports of manufactured goods – which accounted for 82% of the total overseas sales in October – dipped by 0.2% to $5.26 billion. Exports of electronic products, which made up 57% of total merchandise exports that month, rose 1.7% year on year to $3.65 billion. Semiconductors, which accounted for 72.3% of electronics, declined by 0.4% to $2.64 billion.
Exports of petroleum products tanked by 95.6% to $252,060 in October from $5.71 million.
Offsetting these decreases were higher exports of mineral products (by 20.5% to $551.78 million), agro-based products (10.9% to $456.18 million) and forest products (0.6% to $35.68 million).
Meanwhile, imports of mineral fuels, lubricant and related materials grew by 163.7% to $1.65 billion, followed by raw materials and intermediate goods (23.5% to $4.18 billion), consumer goods (11.1% to $1.54 billion), and capital goods (4.5% to $2.99 billion).
“This positive development despite global trade challenges is… attributed to the decision of the Inter-Agency Task Force on the Management of Emerging Infectious Diseases (IATF) not to disrupt exporters’ operations by allowing 100% capacity even during the Enhanced Community Quarantine (ECQ) and stricter Alert Levels. This, thus, boosted the performance of the sector and allowed them to fulfill their commitments to the global market,” Department of Trade and Industry (DTI) Secretary Ramon M. Lopez said in a statement.
For the Trade chief, the coronavirus disease 2019 (COVID-19) pandemic has underscored the need to actively seek new markets and diversify export products in building a “resilient and agile export industry.”
The DTI noted more than 3,700 exporters accessed new markets. It also recorded new exports in 32 product lines.
Meanwhile, ING Bank NV Manila Senior Economist Nicholas Antonio T. Mapa noted in an e-mail that firms are “restocking drawn down inventories as they remain confident of the recovery efforts.”
The economist added the growth in exports was weighed down by the mainstay electronics component which managed to expand marginally while the growth of imports was “bloated” by the more expensive crude oil.
“However, despite the supersized trade deficit, the peso has managed to steady and will likely take its cues more so from the financial market flows set to be dictated by the pace of the [US Federal Reserve] taper and rate hikes,” Mr. Mapa said.
“Gains of imports of capital goods remain shallow, managing a modest pickup, suggesting that potential output will remain curtailed for now. Meanwhile, concerns that the peso would rise rapidly to P53 [to a dollar] are likely to fade now.”
JPMorgan Chase Bank N.A. Singapore Branch economist Nur Raisah Rasid said the results were “slightly higher” than what was expected.
“New [coronavirus] cases continued to decline through October leading to a broad relaxation in mobility restrictions last month, thus we expect investment activity to pick up more discernibly in the coming months,” she said in a research note.
Ms. Rasid also expects consumer goods imports to recover as the economy gradually reopens.
“All told, we continue to look for a wider current account deficit next year of 2.3% of GDP (gross domestic product) from 1.1% of GDP ($4.3 billion) this year. As the [savings-investments] gap narrows alongside the broader recovery, the second-order effects from a growth-led currency weakness and impact on financial and price stability could set the stage for policy normalization in [the fourth quarter of 2022], or possibly earlier should the pace of growth recovery be faster than anticipated,” she said.
In an e-mail, Asian Institute of Management economist John Paolo R. Rivera said supply constraints persist despite a pickup in demand amid the relaxation of lockdown restrictions in October.
“This might continue until supply constraints are eased,” he said.
Nevertheless, Mr. Rivera expects exports to “slowly catch up” given the improvements in the COVID-19 pandemic situation notwithstanding the threat of its potentially more contagious Omicron variant.
In a separate e-mail, Security Bank Corp. Chief Economist Robert Dan J. Roces said he expects the trade deficit to to continue widening in the next few months given the economy is in recovery mode.
“However, risks remain with the Omicron variant and a slowdown in China’s economy,” he said. – Abigail Marie P. Yraola with inputs from Marielle C. Lucenio