PH’s trade-induced dollar outflows zoomed to historic record in 2018

The Philippines recorded its highest net outflow of US dollars on record last year, due to the largest trade gap in the country’s history brought about by the accelerated spending and the infrastructure scheme of the Duterte administration, the central bank said.

Data from the Bangko Sentral ng Pilipinas showed that the country’s 2018 current account —the total value of exported goods and services, minus the total value of imports—yielded a deficit of $7.9 billion in 2018, higher than the $2.1 billion deficit registered in 2017.

“This developed as the widening deficit in the trade-in-goods account more than offset the higher net receipts posted in the trade-in-services, and primary and secondary income accounts,” the central bank said, explaining last year’s 267-percent increase in the current account gap.

At this level, the current account deficit stood at an equivalent of 2.4 percent of gross domestic product, compared to the 2017 level of 0.7 percent of the total value of the country’s economic output.

The trade-in-goods deficit for full-year 2018 rose by 21.9 percent to $49 billion, reflective of the 9.4 percent expansion in imports of goods and the 0.3 percent decline in exports of goods.

Exports of goods, meanwhile, dropped to $51.7 billion in 2018 from $51.8 billion in the previous year owing mainly to lower export shipments of coconut and mineral products.

Imports of goods expanded to $100.7 billion in 2018 from $92 billion in 2017.

“The 9.4 percent increase was attributed to higher imports across all major commodity groups, notably raw materials and intermediate goods, indicating increased domestic production activity,” the central bank said.

Imports of raw materials and intermediate goods grew by 16.7 percent to reach $37.6 billion, supported by increased importation of manufactured goods (20.4 percent) and higher purchases of materials and accessories for the manufacture of electronic products (60 percent).

Imports of mineral fuels and lubricants, capital goods, and consumer goods expanded by 21.3 percent, 5 percent, and 7.6 percent, respectively.

Net receipts in the trade-in-services account aggregated $10.5 billion in 2018, 20.7 percent higher than the $8.7 billion net receipts posted in the previous year. This developed largely on account of increased net receipts in technical, trade-related and other business services; manufacturing services; and telecommunications services, combined with lower net payments in travel services.

According to the central bank, the country’s balance of payments position for the entire 2018 stood at a deficit of $2.3 billion, significantly higher than the $863 million deficit recorded a year ago. This development was brought about by the rise in the current account deficit as the trade-in-goods deficit continued to widen.