July exports still down but decline slowing

The value of products that the Philippines traded with the rest of the world improved to a six-month high in July, narrowing the year-on year contraction as COVID-19 lockdowns here and overseas eased, the government reported on Thursday.

The latest preliminary Philippine Statistics Authority data showed that the combined value of the country’s exports and imports in July amounted to $13.1 billion, down 18.6 percent year-on-year. This was, however, the highest since the $15.1 billion recorded in January this year.

July’s year-on-year drop in external trade was also the slowest on a monthly basis since the 5.9 percent decline recorded in February.

Acting Socioeconomic Planning Secretary Karl Kendrick T. Chua told the Senate finance committee on Thursday that the narrower contraction in foreign trade was reflecting a “U-shaped” recovery in major economic variables in the past three months since the economy gradually opened up from strict lockdown restrictions starting June.

This will aid overall economic recovery, which Chua, who heads the state planning agency National Economic and Development Authority (Neda), said would be “more gradual than quick.”

Exports of goods shrank by 9.6 percent year-on-year to $5.7 billion in July. The decline was slower than the 12.5 percent drop in June and the export value was bigger than the previous month’s $5.4 billion.

Imports fell by 24.4 percent year-on-year to $7.5 billion, steeper than the 23.1 percent in June. The value of July imports was, however, higher than the $6.8 billion in the previous month.

Since imports still outpaced exports, the balance of trade-in goods remained at a deficit of $1.8 billion in July, narrower than $3.6 billion a year ago but wider than the $1.4 billion recorded a month ago.

In a note to clients on Thursday, ING senior economist for the Philippines Nicholas Antonio T. Mapa said the sustained huge fall in imports, especially of capital goods and raw materials, “points to fading potential output, increasing the possibility that the Philippine economy enters a lower growth trajectory over the course of the next few years..