Imports shrank 9.6% to $4.8B in May on lower oil shipments

Imports contracted by nearly a tenth in May as the entry of commodities, particularly food and fuel, declined, although officials were hopeful that optimism in the business sector would translate into a recovery next year.

The National Economic and Development Authority (Neda) took the imports report as another chance to prod other administration officials to take steps to address the country’s food shortage, which has led to higher consumer prices in recent months.

May’s slowdown was blamed on the contraction in mineral fuels and lubricant imports. A slowdown in the growth in capital goods imports, referring to equipment bought by local companies from abroad, also contributed to the decline.

Payments for imported goods in May stood at $4.8 billion, down 9.6 percent from $5.3 billion in the same period last year, the Philippine Statistics Authority (PSA) reported yesterday.

Imports are indicative of the level of business activity within an economy. Higher imports are also needed by exporters, most of whom buy some of their raw materials from overseas. This year, the government expects imports to grow by 9 percent.

“The reversal in import payments for mineral fuels and lubricants in May 2014 from strong growth rates in the last two months significantly pulled down total imports,” Economic Planning Secretary and Neda Director General Arsenio Balisacan said. “Moreover, sluggish importation of capital goods continued to weigh on imports outturn during the period.”

The biggest sources of imports were China, with a share of 15.2 percent, and the United States with an 11-percent share.

In the coming months, Balisacan said the government expected imports to recover, citing the scheduled delivery of new planes for local airlines. The government’s plan to augment the country’s thin power supply should also help improve import numbers.

Meanwhile, Balisacan noted that the import of major food items declined despite current tightness in the domestic supply of food, indicating that the country has not taken advantage of trade opportunities to stem possible upward price pressures. Paolo G. Montecillo