Imports jumped 22.6% to $5.9B in June

The value of goods that came in from overseas jumped by 22.6 percent year-on-year to $5.9 billion in June, bringing to a halt the declines posted in the preceding three months, the Philippine Statistics Authority reported Tuesday.

In a research note, UK-based Standard Chartered Bank said the growth in imports in June was “strong,” noting that the rebound mainly involved shipments of capital goods, consumer products and raw materials.

“It may be a one-off, but shows that domestic demand is still resilient,” Standard Chartered economist for Asia Jeff Ng said.

Ng said that with a narrower trade deficit recorded during the second quarter compared with the first quarter and the solid growth of services exports, “the external drag on GDP (gross domestic product) growth may be lesser in the second quarter compared to the first quarter.”

Economists had said weak exports to date were likely to drag second-quarter GDP growth.

The increase in imports in June from $4.8 billion a year ago came on the back of growth in shipments of raw materials and intermediate goods (up 49.2 percent to $2.9 billion), capital goods (up 23.8 percent to $1.3 billion), and consumer goods (up 13.1 percent to $807 million), the National Economic and Development Authority (Neda) said in a statement.

“The significant surge of import payments signals improvement in the external environment. The increase in importation of raw materials leads us to expect a sustained growth of domestic production while the acquisition of capital goods indicates positive investor confidence,” Economic Planning Secretary Arsenio M. Balisacan said.

Imports of mineral fuels and lubricants, however, dropped by 21.9 percent year-on-year to $833.6 million in June.

The Neda noted that among East and Southeast Asian countries, only the Philippines and Vietnam registered an increase in imports in June.

“For the remaining months of the year, domestic demand is expected to prop up import growth. While there may be a slack in consumer activities during the third quarter of the year due to low seasonal demand for consumer goods, the recovery of government spending should keep imports afloat, particularly on imported capital goods,” Balisacan said.

As the value of June imports exceeded exports worth $5.4 billion, the balance of trade in goods swung to a deficit of $554.8 million that month, reversing the $632.8 million surplus a year ago.

At the end of the first half, total imports were down 2.8 percent to $30.7 billion from $31.6 billion last year.

The government targets a 2-percent growth in imports by the end of the year.

The top 10 sources of imports in June were China, the US, Japan, Taiwan, South Korea, Singapore, Thailand, Malaysia, Indonesia and Saudi Arabia.