The country’s trade deficit in September narrowed to $4.82 billion, the leanest in six months and from a record $6 billion in August, according to preliminary data from the Philippine Statistics Authority.
The gap between imports and exports in September, however, was 26.5 percent bigger than the $3.81-billion deficit in the same month of 2021 although the year-on-year growth was far slower in September this year from 68 percent in September 2021.
Still, local exporters are optimistic of their prospects in the remainder of this year while ING Bank noted an unexpected rise in outbound shipments in September.
Two-way traffic of goods in September was valued at $19.14 billion, an increase of 15 percent from $17.19 billion in the same month of 2021.
Export receipts
In September, export receipts increased by 7 percent to $7.16 billion, a turnaround from a 2-percent decrease in August and faster than the 6.4-percent growth in September 2021.
But at the same time, imports jumped by 14 percent to $11.98 billion, albeit a slowdown from a surge of 26 percent in August and 23 percent in September last year mainly as global oil prices softened.
ING Bank senior economist Nicholas Mapa observed that the “surprise bounce” in exports was driven by a 19-percent jump in electronic shipments, while the continued strong growth in imports was buoyed by high prices of petroleum products.
Miguel Chanco, chief economist on emerging Asian markets at Pantheon Macroeconomics, said they were cautious about getting overly excited about the export performance in September.
“This bump was driven primarily—and narrowly—by shipments to Hong Kong, with exports to the country’s other main export markets exhibiting little movement at the end of the third quarter,” Chanco said.
Chanco said what was more notable about the September results was the slower growth of imports, considering the Philippines’ largely domestic demand-driven economy.
Commodity prices
“Leaving aside the impact of the wild swings in global commodity prices, the complete data for the third quarter show that imports of capital goods lost substantial momentum, masked only by a firmer increase in purchases of consumer goods,” he added.
For his part, PhilExport president Sergio Ortiz-Luis Jr. told the Inquirer in a phone interview he believes the Philippines year-on-year overall export performance from October to December will likely be in the positive, mainly because of low comparative figures from the fourth quarter of 2021.
Heightened alert
“In September of last year, the Philippines was put on heightened alert because of COVID-19. This affected the production and shipments during that month which lasted until December,” Ortiz-Luis said.
Aside from that, Ortiz-Luis said that the expected uptick in consumer spending in the Philippines and other countries also historically propels demand during the last quarter.
Meanwhile, Foreign Buyers Association of the Philippines (Fobap) president Robert Young said the country’s positive export performance in September can be partly attributed to orders from the United States and other major export markets being diverted from China into other Asian countries, including the Philippines.
Young said there was a growing concern about geopolitical tensions involving China.
“There is currently strong anti-China sentiment from big US importers, he said. “So, in the last few months, many orders were canceled and diverted to some Asean countries, like the Philippines.”
Snap lockdowns
The Fobap official added that many US clients avoided and still continue to cut orders from China-based suppliers because of snap COVID-19 lockdowns, leading to shipments and production of goods to slow down or stop abruptly.
Despite this, Young said that textile and garment exports will still likely remain weak in the fourth quarter before bouncing back by February next year.
In September, electronic products remained the top import with a value of $2.98 billion or 24 percent of the total bill that month.
This was followed by mineral fuels, lubricants and related materials, valued at $1.93 billion (17 percent of total); and transport equipment, which amounted to $997.3 million (8.3 percent).
Electronic products also remained the country’s biggest export earner, with $4.5 billion or 63 percent of total receipts.
Completing the top three exports were “other mineral products” with $321.3 million (4.5 percent); and “other manufactured goods” with $321.7 million (4.5 percent).
From January to September, the deficit was pegged at $46.65 billion, swelling by 63 percent from $28.58 billion in the same period of 2021, mainly due to the rapid escalation in oil prices following Russia’s invasion of Ukraine in February this year.