Expensive oil, food bloated PH import bill to highest on record in March

AP file photo

MANILA, Philippines—Expensive oil and food following Vladimir Putin’s operation to destroy bloated the Philippines’ import bill in March to its biggest-ever monthly value on record, the government reported on Friday (May 6).

The Philippine Statistics Authority’s (PSA) latest preliminary external trade data showed that imports last March jumped 27.7 percent to $12.2 billion from $9.5 billion a year ago.

In a report, the PSA said the top contributors to imports growth in March were medicinal and pharmaceutical products, which jumped 152.5 percent year-on-year; mineral fuels, lubricants and related materials, up 148 percent; as well as cereals and cereal preparations, up 35.9 percent.

Ranked by value, imported electronic products (worth $2.8 billion), mineral fuels, lubricants and related products ($2.6 billion), and transport equipment ($849.7 million) led the pack.

The war brought by Putin to Ukraine, with both countries being top oil and wheat producers, caused a tsunami of commodity prices, which the World Bank expects to linger until 2024.

Meanwhile, March’s merchandise exports grew 5.9 percent year-on-year to $7.2 billion, a slower pace than the 15.8-percent and 33.4-percent increases in sales of Philippine-made goods a month ago and a year ago. Export shipments in March were nonetheless also a new monthly high, PSA data showed.

Two-way foreign trade totaled a monthly record of $19.3 billion, up 18.6 percent year-on-year. The jump in imports widened the trade-in-goods deficit last March by 81.4 percent year-on-year to over $5 billion — a gap only surpassed by the record $5.3 billion posted in December of last year.

“The substantial widening of the deficit was due primarily to the unwinding of Lunar New Year effects, which hit imports particularly hard in February. Outbound shipments to China and the US rebounded respectably at the end of first quarter, while those to Japan remained very punchy,” said Miguel Chanco, Pantheon Macroeconomics chief emerging Asia economist, in a report.

“The only real blemish in the latest report is a pullback in demand from Hong Kong. All told, the lead from Korean exports suggests that year-on-year export growth should rebound solidly in April, with the help of a less adverse base effect,” Chanco said.

For Chanco, “the complete import data for the first quarter show clearly where the economy stumbled at the start of this year.”

Imports from January to March climbed 28 percent year-on-year to $33.3 billion, faster than the 9.8-percent increase in exports to $19.4 billion.

Referring to importation of capital goods for infrastructure and investments, Chanco said “investment spending remained quite healthy, though the scope for catch-up on this front remains extensive.”

“Meanwhile, the Omicron hit to household spending in January is plain to see, with purchases of consumer goods slipping by 0.3 percent quarter-on-quarter, reversing a small part of the 8.2-percent leap at the end of last year,” Chanco said.

“Altogether, the full data indicate that net trade was a stronger drag on GDP [gross domestic product] growth in the first quarter, shaving 3.3 percent from year-on-year GDP growth, harder than the 2.5-percentage point (ppt) hit in the fourth quarter” of 2021, he said.

The government will report on first-quarter GDP performance on May 12.

Total external trade during the first quarter grew 20.7 percent year-on-year to $52.7 billion, while the end-March trade deficit widened 66.5 percent to $13.9 billion, putting more depreciation pressure on the peso.

TSB