Goods trade balance still in deficit as exports down, imports up in May
Sales of Philippine-made goods abroad dropped for the fifth consecutive month while imports increased for the 10th straight month in May, resulting in a wider trade-in-goods deficit of $3.7 billion, the government reported Tuesday.
Last May, merchandise exports declined 3.8 percent to $5.762 billion, reversing the 24-percent jump to $5.988 billion a year ago, preliminary Philippine Statistics Authority data showed.
The biggest drop in exports were in the following products: ignition wiring set and other wiring sets used in vehicles, aircraft and ships, down 40.8 percent; other mineral products, down 29.5 percent; and electronic equipment and parts, down 8.6 percent.
The freight-on-board value of imported goods that entered the country in May, meanwhile, climbed 11.4 percent to $9.462 billion, although slower than the 20.2-percent growth to $8.495 billion last year.
The following import groups posted growth that month: mineral fuels, lubricants and related material, up 41.6 percent; iron and steel, up 31.4 percent; miscellaneous manufactured articles, up 26.9 percent; electronic products, up 16.1 percent; telecommunication equipment and electrical machinery, up 14.8 percent; plastics in primary and non-primary forms, up 9.6 percent; metal products, up 8.6 percent; other food and live animals, up 7.8 percent; as well as industrial machinery and equipment, up 7.6 percent, PSA data showed.
Exports and imports combined totaled $15.22 billion in May, 5.1-percent higher than the total external trade in goods of $14.48 billion a year ago.
But since imports outpaced exports, the trade balance remained at a deficit and wider than the $2.51 billion in the same month last year.
The trade deficit prevailing resulted into a current account deficit as more dollars were being spent, which was worrying the market and was partly to blame for the weaker peso.
The domestic currency depreciated against the US dollar to almost 12-year low levels last month.
To arrest declining shipments overseas, Socioeconomic Planning Secretary Ernesto M. Pernia said in a statement that “addressing cumbersome regulations, enhancing trade facilitation, and ensuring better access to trade finance will help improve the country’s business climate for exports.”
“The recent passage of the Ease of Doing Business Act of 2018 should promote trade as it aims to reduce bureaucracy and corruption, factors which weigh down on economic activity. Its timely implementation is needed to improve trade facilitation,” said Pernia, who heads the state planning agency National Economic and Development Authority.
“Opportunities from free trade agreements (FTAs) should also be maximized by facilitating programs that will increase awareness of industry players on the benefits of these agreements. The recent ratification of the Philippines-European Free Trade Association FTA would boost exports to member states such as Iceland, Liechtenstein, Norway and Sweden,” the Neda chief added.
“Successful negotiations for the PH-European Union FTA is expected to secure more permanent preferential duties for Philippine export products compared with the EU generalized system of preferences (GSP+), thus further expanding market base,” according to Pernia.
For Pernia, “vehicle autoparts, coconut, bananas, travel goods and handbags, tuna, carrageenan, and activated carbon should be given better exposure as these could potentially become major drivers of exports growth.”
Last week, the Cabinet-level Development Budget Coordination Committee (DBCC) cut to 9 percent the merchandise exports growth target for 2018 from 10 percent previously, while the imports’ goal was also reduced to 10-percent increase from 11 percent.
Pernia had said that the trade war between top trading nations such as the United States and China “may dampen a bit the global economic growth.”
As such, the trade war “could have adverse effect on our exports in the global market,” Pernia had said.
But economic managers earlier said that the trade war would not directly impact on the Philippines, as shipments of goods to and from the US and China remain relatively small.
For the period 2019 to 2022, the DBCC kept the yearly merchandise exports target of 9-percent expansion and imports growth goal of 10 percent. /je
