The Philippines’ trade deficit in August narrowed to a two-month low as both exports and imports showed modest growth despite slowing economic output from the country’s major trading partners.
Preliminary data from the Philippine Statistics Authority (PSA) showed that the gap between imports and exports had declined by 10.3 percent to $4.38 billion in August from the shortfall in the previous month. However, this was still 6.6 percent higher compared with the deficit in August last year.
For the first eight months, the trade deficit narrowed by 4.3 percent to $34.3 billion from last year.
The country’s merchandise imports grew at a slower pace of 2.7 percent year-on-year to $11.123 billion in August from last year’s $10.83 billion. Compared with the previous month, it slipped by 0.02 percent.
Michael Ricafort, chief economist at Rizal Commercial Banking Corp., said that the month-on-month decline in imports may be attributed to several factors, including the “ghost month,” a period typically marked by decreased business activity, as well as disruptions from recent typhoons.
“This was also due to the vacation season in the United States that also slowed down transaction on global trade,” Ricafort told the Inquirer.
Remaining upbeat, Ricafort stressed that the modest year-on-year growth was promising, as it could lead to a revival in global trade, along with increased investments and economic activities, particularly with forthcoming rate cuts by the US Federal Reserve and local authorities.
Electronic products remained the top imports, valued at $2.44 billion, or about 22 percent of total. Mineral fuels, lubricants and related materials followed, amounting to $1.79 billion, or 16.1 percent, while transport equipment amounted to $937.25 million or 8.4 percent.
China remained the largest supplier, providing $2.79 billion worth of goods, or about a quarter of overall imports. Indonesia came in second, with imports totaling $972.4 million.
Q3 recovery
Total exports grew by 0.3 percent year-on-year to $6.75 billion in August, higher than $6.25 billion in July and $6.73 billion a year ago. By value, export receipts in August were the highest since September 2023.
Miguel Chanco, economist at Pantheon Macroeconomics, said exports have been picking up, thanks to stronger growth in South Korea, a major player in the global semiconductor market.
“This rebound since the start of the third quarter has been driven primarily by a comeback in demand from nontraditional markets and, to a smaller extent, recovering shipments to both the US and Japan,” Chanco added.
According to the PSA, manufactured goods, which made up 81.2 percent of the country’s total export earnings, fell by 0.6 percent to $5.48 billion.
The United States continued to be the top destination for local goods, with exports reaching $1.22 billion, accounting for 18.1 percent of total exports. Following closely was Hong Kong, with exports valued at $942.56 million.
The interagency Development Budget Coordination Committee projects 5 percent and 2 percent growth in exports and imports, respectively, this year.