Trade gap narrows as exports recover
The country’s merchandise exports recovered in April while imports cut short three straight months of growth, narrowing the trade-in-goods deficit to $3.499 billion that month.
The latest preliminary Philippine Statistics Authority (PSA) data released Tuesday showed that shipments of Philippine-made goods overseas rose 0.4 percent year-on-year to $5.51 billion in April, reversing four consecutive months of contraction.
In a statement, the state planning agency National Economic and Development Authority (Neda) attributed the increase in April exports to “continued recovery of agro-based products (up 31.1 percent in April from 11.9 percent in March) and the uptick in the sales of manufactured goods (up 2 percent in April from 3.1-percent decline in March).”
Exports to the United States, China and South Korea grew by 10.6 percent, 20.4 percent and 46.5 percent, respectively, it added.
On the other hand, the value of imported products that entered the country that month declined 1.9 percent year-on-year to $9 billion.
Neda said the import drop was due to reduced payments for raw materials and intermediate goods (down 16.3 percent), zero growth in capital goods imports and the slowdown in purchases of consumer goods (up 7.6 percent in April from 20.6 percent in March).
The balance of trade in goods in April narrowed from $3.7 billion a year ago.
Total two-way trade also decreased 1 percent to $14.51 billion in April from $14.66 billion during the same month last year.
Socioeconomic Planning Secretary Ernesto M. Pernia said the recovery of exports in April could be sustained by continuously increasing market access for Philippine products and reforms to improve productivity and lower production costs.
“To support the export industry in the country, it is crucial to pass the amendments to the Public Service Act, the Foreign Investment Act and Retail Trade Act,” said Pernia, who heads Neda.
“The successful passage of the Trabaho bill will also modernize the country’s tax regime while streamlining the grant of fiscal incentives,” Pernia added, referring to the proposed Tax Reform for Attracting Better and Higher Quality Opportunities, which is also aimed at slashing the corporate income tax rate from 30 percent at present—the highest in Asean—to 20 percent.
“With the passage of these reforms, we can leverage the Philippines’ attractiveness to both foreign and local investors. These investments can help our industry to improve production efficiency and product diversification,” the Neda chief said.
