Imports down for 2nd month in a row in May

Merchandise exports inched up for the second straight month in May but imports declined also for two consecutive months as the delayed implementation of the 2019 national budget stalled importation of raw materials and capital goods for infrastructure projects.

The latest preliminary figures released by the Philippine Statistics Authority (PSA) on Wednesday showed that the value of Philippine-made goods sold abroad rose 1 percent year-on-year to $6.155 billion in May.

Exports of copper concentrates, ignition wiring sets and other wiring sets used in vehicles, aircraft and ships; fresh bananas, chemicals; metal components, gold, other mineral products, and electronic products rose from year-ago level, offsetting the drops posted in machinery and transport equipment and manufactured goods.

The value of imported goods that entered the country that month fell by 5.4 percent year-on-year to $9.43 trillion, a faster pace of contraction than the 1.9-percent decline posted in April.

PSA data showed that while imports of cereals and cereal preparations, miscellaneous manufactured articles, electronic products, and telecommunication equipment and electrical machinery surged, most other commodity groups posted lower shipments from overseas—iron and steel, transport equipment, mineral fuels, lubricants and related materials, plastics in primary and nonprimary forms, industrial machinery and equipment, as well as other food and live animals.

The bigger decline in imports offset the incremental exports growth such that total trade dropped 3 percent to $15.584 billion in May from $16.064 billion a year ago.

May’s trade-in-goods deficit nonetheless narrowed to $3.275 billion from $3.88 billion last year.

“The ill effects of the delay in the passage of the 2019 budget coupled with still elevated borrowing costs hurt demand for both capital goods and raw materials. Capital goods were slightly negative while raw materials dropped 10.7 percent for the month of May.  Almost all subcomponents for intermediate materials were in the red with iron steel and nonferrous metals seeing double-digit dips while imports for use in electronics exports were down 10.4 percent. With the government and private sector’s plans for expansion on hold, capital goods and raw materials dragged overall imports lower,” ING Bank Manila senior economist Nicholas Antonio T. Mapa said in a note to clients.