The Philippines’ trade deficit narrowed as of the end of August, raising the country’s opportunity to sustain investment-led economic growth, according to a Finance official.
The Department of Finance (DOF) said in an economic bulletin the shortfall of exports against imports continued to shrink during the eight months of 2017, settling at 9.2 percent of the gross domestic product (GDP) or $17.05 billion from 9.8 percent of GDP or $17.5 billion in the same period in 2016.
“The lower trade deficit will help narrow the country’s balance of payments (BOP) deficit, possibly reversing the current account shortfall and tempering the depreciation of the peso,” Finance Undersecretary Gil Beltran said.
The BOP is a closely watched economic indicator because it shows a country’s level of foreign-exchange liquidity, which is necessary to engage in commercial transactions with the rest of the world.
Factors that help boost the country’s BOP include foreign investments, income from exports, remittances sent by overseas Filipinos, and foreign currency-denominated loans extended to the government and income by the Bangko Sentral ng Pilipinas from its investments abroad.
Beltran, the DOF’s chief economist, noted that from January to August, merchandise export sales rose by 13.3 percent to reach $42.11 billion.
He said major export items also grew, including electronics, which was up 10.9 percent.
Receipts from machinery and equipment surged 27.9 percent while earnings from garments jumped 16.2 percent.
“Meanwhile, merchandise imports rose by 8.2 percent to $59.15 billion, slowing down from a blistering 18.4 percent growth last year, despite double-digit increases in the imports of capital goods,” Beltran said.
On the other hand, the import bill for specialized machinery and office equipment for the eight-month period rose by 12.7 percent while that for imported machinery and transport equipment went up by 11.7 percent.