Growth in April imports fastest in 5 years

The value of imported goods shipped into the country in April jumped by 29.2 percent—the fastest increase in more than five years, the Philippine Statistics Authority (PSA) reported Friday.

Total imports in April reached $6.5 billion, up from $5.1 billion in the same month last year, a preliminary PSA report showed.

The 29.2-percent growth  in imports at the start of the second quarter was the highest since the 35.6-percent climb posted in November 2010. It was a reversal of the 5.8-percent contraction recorded in the same period last year.

The National Economic and Development Authority (Neda) attributed the jump in imports to the “double-digit growth in purchases of capital goods, raw materials and intermediate goods, and consumer products.”

The freight-on-board value of imported electronic products—usually components of semiconductor and electronics assembled in the country for re-exportation—grew by 69.9 percent year-on-year to $1.7 billion, also reversing the 2-percent drop recorded last year.

In April, nine of 10 major commodities saw increases in imports. These are electronic products; metal products (up 91 percent year-on-year); industrial machinery and equipment (up 73.9 percent); telecommunication equipment and electrical     machinery (up 72.8 percent); iron and steel (up 62.9 percent); miscellaneous manufactured articles (up 34.2 percent); plastics in primary and non-primary forms (up 31 percent); transport equipment (up 25.4 percent), and food and live animals (up 7.5 percent).

Only imports of mineral fuels, lubricants and related material registered a year-on-year decline during the month (-10.9 percent).

“The continued strength of merchandise imports, buoyed by purchases of capital goods and durable goods, hints of a robust economic performance in the second quarter. In particular, the double-digit growth of capital goods since September 2015 points to sustained business sector confidence while robust imports of durable consumer goods point to strong consumer confidence,” Economic Planning Secretary Emmanuel F. Esguerra said in a statement.

Moving forward, “the trend is expected to continue for the rest of the year especially given that the incoming administration has vowed to continue infrastructure spending,” said Esguerra, who is also the director-general of Neda.

“Also, a renewed focus on the manufacturing sector could further boost demand for capital goods,” the Neda chief added.

Income tax reform, as committed by the incoming Duterte administration, would also bolster consumption of imported products, according to Esguerra.

“Consumer spending is also expected to support the growth of merchandise imports in the coming years, especially if the incoming administration pushes through with reforms to make income taxes more progressive.”

The incoming government should also address infrastructure bottlenecks to accommodate the deluge of imported vehicles and motorcycles.

“The sustained increase in imports of passenger cars, reflects an important finding of the AmBisyon Natin 2040 that most Filipinos aspire for car ownership. However it could also be due to their bad experience with public transportation. Given this, implementation of road infrastructure and mass transport projects needs to be accelerated. Problems with respect to licensing and vehicle registration also need to be addressed,” Esguerra noted.

With imports higher than the $5-billion export receipt in the same month, a balance of trade deficit of $2.3 billion was recorded. This was wider than the trade gap in April last year of $619 million.

The country’s top source of imports was China, accounting for 20 percent of the total or $1.3 billion, 68.8-percent higher year-on-year. In contrast, exports to China last April reached only $416.1 million.

At the end of the first four months, merchandise imports totaled $25.1 billion, up 13.5 percent from $22.1 billion at the end of April last year.