Deluge of imports boosts PH foreign trade growth in October
MANILA, Philippines—The Philippines’ trade with the rest of the world rose 15.2 percent year-on-year to $16.8 billion in October amid a surge in imports that came with the reopening of more economic sectors.
The Philippine Statistics Authority’s (PSA) latest preliminary external merchandise trade data on Friday (Dec. 10) showed October exports and imports increased from $14.6 billion in 2020.
In the same month last year, total trade shrank by a tenth amid the then prolonged COVID-19 quarantine measures which restricted movement of non-essential goods, aggravated by weaker domestic consumption and global demand amid a pandemic-induced recession.
Last October, volume of imported goods grew by a fourth year-on-year to $10.4 billion, reversing the 15.9-percent drop a year ago.
In a report, Rizal Commercial Banking Corp. (RCBC) chief economist Michael Ricafort noted that while the volume of October imports was smaller than September’s $10.6 billion, it was close to the record $10.7 billion posted in October 2018.
But Pantheon Macroeconomics senior Asia economist Miguel Chanco said in a separate report that “much of the strength in inbound shipments is concentrated mainly in purchases of raw materials and intermediate goods and in mineral fuels, masking the subdued nature of domestic demand.”
“These two categories have accounted for over 80 percent of the year-on-year rise in total imports since August, reflecting in part the recent surge in global commodity prices,” Chanco said.
“By contrast, imports of capital goods are still struggling to break their gentle downward trend, while those of consumer goods have remained broadly flat since the end of the first quarter,” Chanco added.
Exports inched up by 2 percent year-on-year to $6.4 billion, the slowest growth since April when sales of Philippine-made products abroad started to rebound from last year’s slump.
“The continued slowdown in export growth was particularly disappointing, as base effects were fairly neutral,” Chanco said.
“The relative sluggishness is consistent with the general underperformance of the Philippines’ outbound shipments since the start of this year,” he said.
“Exports are still struggling to build any meaningful upward momentum,” Chanco added.
“Demand from key markets has been extremely volatile in the last few months,” he said.
According to Chanco, while shipments to China and Hong Kong had recovered modestly at the start of fourth quarter 2021, the same declined sharply in Japan and United States, which are big markets, too.
The balance-of-trade in goods remained at a deficit, amounting to $4 billion in October due to larger imports and their faster growth than exports. October’s trade deficit was not only nearly double that of last year’s, but also the highest since the $4.2-billion gap in January 2019.
Ricafort said measures to further reopen the economy to return to normalcy through a revised COVID alert system and the use of selective instead of general lockdowns “would increase business and economic activities.”
These measures, Ricafort said, “would lead to some pickup in importations and export activities as well.”
Cumulative two-way foreign trade from January to October reached $157.4 billion, up 24 percent year-on-year.
End-October imports jumped 29.7 percent year-on-year to $95.3 billion, outpacing 10-month exports growth of 16.1 percent to $62.1 billion.
This led to the widening of deficit in trade by 66 percent year-on-year to $33.2 billion as of October.
TSB
