Philippine imports likely slumped in February due to cheap fuel, which likely led to a trade surplus for the month, Standard Chartered said this week.
In a note to clients, Standard Chartered said apart from the recent collapse in oil prices in international markets, lower imports may also be a result of favorable base effects.
“Import growth was probably dragged down by lower energy prices, which reduced energy imports,” the bank said on Monday.
“However, we expect electronic-goods imports to increase by double digits for a third consecutive month, and to continue their strong performance,” it added.
Growth in imports is an indication of the strength of the domestic economy since it shows the country’s capacity to buy products from overseas.
Data for February imports will be released Tuesday.
The bank said it sees the Philippines posting a small trade surplus of $100 million, versus the $750 million deficit in January, which translates into a smaller contraction of 6.6 percent year-on-year for February, versus 14.2 percent in January.
“We expect the trade balance to benefit from lower import growth, although sluggish export growth may constrain the upside near-term,” the bank said.
The trade balance refers to the difference between imports and exports.
A deficit means more goods were imported than exported, while a surplus means the opposite.
Imports for January dropped in several areas, led mainly by minerals and fuels, which reflect cheaper fuel prices.
China remained the biggest source of imports, earning a share of 15.4 percent share. This was followed by Singapore with 9.1 percent, and the United States, which accounted for 9 percent for the month.
“Our prospects for the business sector, including export-oriented industries, remain largely positive, especially in the quarter ahead, as more businesses have expressed their interest to expand operations, especially the manufacturing sector,” Socioeconomic Planning Secretary Arsenio Balisacan said in a previous statement.
“Consumer spending is also likely to remain upbeat, in line with increases in income opportunities as reflected in the January 2015 employment numbers,” he said. Paolo G. Montecillo