The country’s trade gap narrowed in August following a sharp pullback in imports while exports posted a surprise growth.
Preliminary data released on Tuesday by the Philippine Statistics Authority showed the country recorded a trade deficit of $4.1 billion in August, 31.5 percent smaller compared with a year ago when the gap reached $6 billion. The August figure was also slightly narrower than the $4.2 billion deficit in July.
A trade deficit happens when a country pays more for its imports than it is earning from exports.
Broken down, imports retreated 13.1 percent year-on-year to $10.8 billion in August. Inbound shipments of fuel, capital goods and raw materials tanked, figures showed, while consumer goods posted an annual growth of 4 percent as consumption stayed resilient despite surging inflation.
Nicholas Mapa, senior economist at ING Bank in Manila, believes a sagging import bill could weigh on the economy.
“The sustained contraction in capital goods and raw materials does not bode well in terms of capital formation and the improvement of productive capacity in the coming months, suggesting negative returns on medium term growth prospects,” he said.
On the flip side, exports unexpectedly jumped 4.2 percent year-on-year to $6.7 billion on the back of 6.1-percent growth in electronics shipment, which cornered 57.8 percent of total exports.
Miguel Chanco, chief emerging Asia economist at Pantheon Macroeconomics, said demand from most of the country’s main exports markets—barring China—bounced back “solidly,” with the United States leading the way. INQ