Foreign trade and domestic factory output surged in July compared to their year-ago, pandemic-battered levels, benefiting then from the further economic reopening before the more contagious Delta strain forced the return of current stricter quarantine restrictions.
The Philippine Statistics Authority’s (PSA) latest preliminary data released on Thursday showed total external trade climbed 19.2 percent year-on-year to $16.1 billion last July, as merchandise exports rose 12.7 percent to $6.4 billion and imports jumped by a faster 24 percent to $9.7 billion.
“Trade numbers reflect the gradual reopening of the economy although the year-on-year figures may have been bloated due to base effects … Inbound shipments outpaced export growth due in part to increased volume of fuel and as crude oil prices rose over the last year,” ING senior economist Nicholas Mapa said in a report.
The value of goods brought in and out of the country in July, however, was lower than June’s $16.5-billion worth as both exports and imports slightly declined month-on-month, and were expected to further drop in August.
“We can expect a pullback in trade activity for the August report after Philippine authorities reimposed tighter lockdown measures during the month. Nonetheless, we forecast import growth to continue to outperform the export sector with the trade deficit likely staying elevated for the balance of the year,” Mapa said.
Robust growth
As imports continued to post robust growth, the balance of trade-in-goods widened by 54.1 percent year-on-year to $3.3 billion in July, which Mapa said would revert the current account to a deficit and further weaken the peso.
“Current account deficits coupled with possible portfolio outflows in the coming months due to the [US Federal Reserve’s] taper translates to more pressure on the local currency. With the BSP (Bangko Sentral ng Pilipinas) signalling it would refrain from hiking policy rates this year, it looks like the Philippine peso will remain on the backfoot to close out 2021,” according to Mapa.
The PSA’s latest monthly integrated survey of selected industries (Missi) report for July also released on Thursday showed the volume of production index, a proxy for factory output, jumped by a record 537.9 percent year-on-year.
The PSA said production in 14 out of the 22 industries covered by Missi registered increases in July, led by the manufacture of coke and refined petroleum sector whose output climbed by 3,525.6 percent mainly as a local refinery resumed its operations after months of temporary closure.
The value of production index also grew by a record-high rate of 528.1 percent year-on-year in July, PSA data showed.