July trade gap narrowed as import bill dropped

MANILA  -The Philippines’ deficit in the trade of goods continued to shrink, this time by 30 percent year-on-year to $4.2 billion in July from $6 billion in the same month last year as volume of global traffic slid following a rapid, postpandemic boost.

Preliminary data at the Philippine Statistics Authority also showed that the trade gap was wider than $3.9 billion in June when the deficit surged by 33 percent.

Last July, export receipts decreased by 1.2 percent to $6.1 billion from $6.2 billion in the same month of 2022.

Meanwhile, the import bill dropped by 15.3 percent to $10.3 billion from $12.2 billion.

Two-way traffic of goods—to and from the Philippines—decreased by one-tenth to $16.49 billion in July, reversing from a 12-percent growth to $18.4 billion that was observed in the same month last year.

Monthly total trade has been contracting since December 2022. Monthly imports have been decreasing since November while monthly exports decreased for the first time in three months.

Meanwhile, the monthly trade deficit has been narrowing since April 2023.

The latest monthly readout brought the January-July tally to a deficit of $32.18 billion, which is 10 percent less than the $35.84 billion recorded in the same seven months of last year.

For the seven-month period, exports dropped by 8.2 percent to $41.1 billion from $44.8 billion.

At the same time, imports fell by 9.1 percent to $73.27 billion from $80.59 billion.

In July alone, electronic products were still the top export, with $3.65 billion in receipts representing 59 percent of the month’s total.

Also in the top three exports were “other manufactured goods” with $275.74 million and “other mineral products” with $219.41 million.

Electronic products were also the country’s top import with a value of $2.26 billion or about 22 percent of the total bill in July.

Completing the top three imports were mineral fuels, lubricants, and related materials valued at $1.53 billion; and transport equipment at $997.16 million.

As early as June 1, Fitch Ratings said global trade was slowing sharply after a rapid postpandemic recovery in 2021 and 2022.

“Monetary tightening, fading fiscal support and service sector reopening are now weighing on global goods demand, which leapt extraordinarily during the pandemic,” Fitch said in a report.

The global credit rater added that world industrial production was also decelerating rapidly.

Fitch forecasts that global trade growth will slow down sharply from 1.9 percent in 2023 from 5.5 percent in 2022.

“That would align it with global GDP (gross domestic product), which we project to grow by 2 percent, down from 2.7 percent last year,” the company said. “Trade growth seems unlikely to outpace GDP in the medium term, as globalization stalls.”