Trade deficit widens in January – PSA

Imports continued to outperform exports in January, resulting in a trade deficit that has weighed down on the peso since the start of 2018.

The Philippine Statistics Authority (PSA) reported on Friday that the total external trade in goods last January grew 7 percent to $13.75 billion from $12.85 billion a year ago, although a slower growth than the 16-percent increase in January 2017.

Merchandise exports in January inched up 0.5 percent to $5.22 billion from a year ago’s $5.19 billion, also slower than the 22-percent jump in 2017.

In the case of imported goods, the value that entered in January rose 11.4 percent to $8.54 billion from $7.67 billion a year ago, slightly slower than the 12.2-percent climb in January last year.

As import receipts surpassed the amount of Philippine-made products sold abroad, the balance of trade in goods in January remained at a deficit of $3.32 billion, 34.3-percent wider than the $2.47-billion deficit a year ago.

Socioeconomic Planning Secretary Ernesto M. Pernia, earlier said that the widening trade in goods deficit was “not good, but transitory and manageable.”

Last year, imports jumped 10.2 percent to $92.7 billion, outpacing the 9.5-percent growth in exports to $62.9 billion, resulting in a record-high trade-in-goods deficit of $29.8 billion.

The surge in imports, however, had reversed the current account to a deficit, which had the market worried and pulled the peso weaker in recent months.

At end-January, the peso depreciated to 51.341:$1 from end-2017’s 49.958:$1.

In February, the peso slipped to 11-year lows, flirting with the 52:$1 level.

A component of the balance of payments, the current account was expected to swing to a $100-million deficit in 2017 from the $600-million surplus in 2016 amid the government’s push to ramp up infrastructure investments leading to a surge in imports of capital goods.

This year, the current account deficit is expected to swell to $700 million.

Economic managers had said that as the Duterte administration embarks on its ambitious “Build, Build, Build” infrastructure program alongside expectations of sustained robust economic growth, demand for imports will remain strong in the near term.

Under “Build, Build, Build,” the government plans to rollout 75 flagship, “game-changing” projects, with about half targeted to be finished within President Rodrigo Duterte’s term, alongside spending a total of over P8 trillion on hard and modern infrastructure until 2022 to usher in “the golden age of infrastructure” after years of neglect.

PSA data showed that China was the Philippines’ top trading partner in January, with total trade between the countries worth $2.2 billion.

Imports from China reached $1.61 billion, while exports from the Philippines amounted $591.91 billion.

As such, the trade balance was in favor of China, at $1.02 billion, the biggest among the Philippines’ trading partners.                   /kga