Logo of the Philippine Statistics Authority. PSA Facebook
MANILA, Philippines — The Philippines’ sales of its products abroad and the value of goods it imported from January to June fell by nearly a fourth to $67.5 billion amid a COVID-19-induced global recession.
The latest preliminary Philippine Statistics Authority (PSA) data released on Wednesday showed that end-June merchandise exports dropped by 17.8 percent to $28.4 billion from $34.6 billion a year ago.
Six-month imports slid by a faster 29 percent to $39 billion from $55 billion last year.
As such, two-way external trade during the first six months declined by 24.7 percent from a year ago’s $89.6 billion.
During the month of June alone, total external trade shrank by 19.9 percent to $11.9 billion, an improvement from the 35.3-percent year-on-year drop posted last May.
“Merchandise exports declined by 13.3 percent (from a 26.9-percent drop in May) as outward shipments of mineral products, manufactured products, and forest products registered notable improvements. Imports, meanwhile, recovered gradually by registering a 24.5-percent decrease (from a 40.6-percent contraction in May) as inward shipments of unprocessed raw materials showed a positive rebound with the re-opening of the economy,” the state planning agency National Economic and Development Authority (Neda) noted in a statement.
“This slower decline in the country’s trade performance signals the resumption of economic activities,” Acting Socioeconomic Planning Secretary and Neda chief Karl Kendrick T. Chua said.
But the country’s chief economist warned that “the recent issuance to revert Metro Manila, Bulacan, Cavite, Laguna, and Rizal back to a modified enhanced community quarantine (MECQ) status may, for a limited period, affect businesses and the workforce as certain sectors need to scale back or temporarily suspend operations.”
The areas placed under more-stringent MECQ accounted for about two-thirds of the economy, and hosted many of the country’s export and industrial zones.
“With restricted mobility and economic activity due to the pandemic, [global] GDP growth is negatively affected. Our major trading partners’ GDP has declined in the second quarter of the year, resulting in a reduced appetite for imported goods. This has led to lower demand for Philippine exports,” Chua said.
As the Philippines’ merchandise imports still outpaced exports, the balance of trade-in-goods remained at a deficit, although at a narrower $10.6 billion as of June–almost half of the $20.4-billion trade deficit a year ago.
For ING Bank Philippines’ senior economist Nicholas Antonio T. Mapa, the faster drop in imports would keep the peso stronger against the greenback even as the overall decline in external trade may mean slower economic recovery moving forward.
“Weaker imports translate to lower demand for foreign currency onshore, which has helped support the recent peso appreciation trend. Since we expect imports to sustain their downward trend, we can also forecast the peso to remain supported in the near term as still steady inflows related to overseas Filipino remittances and foreign borrowings outpace onshore dollar demand,” Mapa said in a note to clients.
“Meanwhile, we also expect GDP [gross domestic product] momentum to be slowed even further as the flow of capital goods, raw materials and consumer goods remains weak with positive GDP growth only expected to return in a base-effect induced rebound in 2021,” Mapa added.