Exports, imports slump on supply chain disruptions
Global and domestic supply chain disruptions caused by the COVID-19 pandemic, which limited movement not only of people but also of goods, inflicted a sharp drop in the Philippines’ exports and imports in March, the government reported on Wednesday.
Preliminary Philippine Statistics Authority data showed that sales of Philippine-made products abroad slid 24.9 percent year-on-year to $4.53 billion, while imported goods fell by a faster 26.2 percent to $6.91 billion in March.
Since the dip in imports outpaced the exports decline, the trade-in-goods deficit narrowed by 28.6 percent to $2.38 billion that month.
“The sharp contraction in March trade data reflects the early onset of COVID-19, primarily in its effect on the country’s major trade partner—China. The Philippines, being a part of the global supply chain, saw an abrupt pullback in export demand orders as China, Japan and South Korea were battling the virus. Imports for March dropped, mirroring the negative performance of government construction efforts as raw materials were unable to arrive on time as supply chains were disrupted,” ING Bank Philippines senior economist Nicholas Antonio Mapa said in a note to clients.
“Meanwhile, the March 15 lockdown cut off the Philippines with the rest of the world, with port congestion noted immediately after the implementation of the quarantine as details on logistics had yet to be put in place. We expect months of sustained contraction in the immediate term as lockdown stymies manufacturing and business activity. Subdued global demand should ensure trade in 2020 will be disappointing,” Mapa added.
Total external trade in March contracted by 25.7 percent year-on-year to $11.44 billion, which the state planning agency National Economic and Development Authority (Neda) said was the lowest monthly value of exports and imports combined in two years.
In a statement, Neda blamed “the COVID-19 pandemic around the world and the resulting restrictions in production supply chains and global trade flow” for the Philippines’ weak external goods trade in March.At the end of the first quarter, Philippine exports declined 5.2 percent year-on-year to $15.72 billion while imports fell 13.6 percent to $23.26 billion, bringing total three-month foreign trade down by 10.4 percent to $38.98 billion.
The first-quarter trade deficit nonetheless narrowed by 27.1 percent to $7.541 billion. —Ben O. de Vera
