The Philippines’ import volume slid for the fifth straight month last August, which economists said partly mirrored slower government spending on public investment and infrastructure no thanks to the late approval of the 2019 national budget.
Initial Philippine Statistics Authority (PSA) data released on Thursday, Oct. 10, showed that the country’s import bill declined 11.8 percent year-on-year to $8.7 billion last August, reversing the 12.6-percent jump posted a year ago.
The drop in imports that month was the biggest since sourcing of products from abroad fell below 2018 levels starting April.
In a statement, the state planning agency National Economic and Development Authority (Neda) blamed the slide to “declines in imports of raw materials, intermediate goods, and capital goods”—products that serve as input for capital investments.
“Capital goods, raw materials, fuel and consumer imports all contracted as elevated borrowing costs and the budget delay knocked down capital formation,” said ING Bank Manila senior economist NIcholas Antonio T. Mapa in a note to clients.
“In particular, all types of capital imports contracted while raw materials related to construction fell as the impact of the Bangko Sentral ng Pilipinas’ (BSP) aggressive 2018 rate hike and the budget delay continued to surface,” Mapa said.
“The latest decline in imports show that the national government’s expenditures did not go into buying capital goods necessary for the infrastructure spending program,” said Security Bank chief economist and AVP Robert Dan J. Roces in a separate research note, referring to the ambitious “Build, Build, Build” program.
Import of steel and iron fell 44.2 percent, transport equipment by 29.1 percent and industrial machinery and equipment by 15.3 percent, said Roces in his note.
Export of Philippine goods, on the other hand, sustained its growth, inching up 0.6 percent year-on-year to $6.3 billion last August. Neda said it was due to “modest performance of agro-based products, fores and electronic products.”
“Outbound shipments kept the streak of growth alive amid the trade war,” Mapa said referring to the US-China trade tit-for-tat.
Exports to the United States “were up again, growing despite the peso’s recent strength,” Mapa said./TSB