PH trims trade deficit amid import slump

MANILA, Philippines — The Philippines posted in November its narrowest merchandise trade gap in three months after imports registered their first contraction in four months while exports extended their slump, reflecting economic challenges in tackling both external and domestic headwinds.

Preliminary data from the Philippine Statistics Authority (PSA) showed the trade deficit in November at $4.77 billion, smaller by 0.04 percent compared with a year ago.

That the country continued to post a trade deficit means it still spent more dollars on imports than it earned from export sales.

READ: Oct trade deficit widest in 26 months as exports faltered

But figures that showed the trade imbalance in November was the smallest since August 2024. For the 11 months, the trade deficit amounted to $50 billion, 4.2 percent bigger year-on-year.

The PSA said inbound shipments had fallen by 4.9 percent to $10.46 billion in November, snapping four straight months of growth.

By type of goods, energy imports posted the largest decline at 24.4 percent amid declining global oil prices. Notably, purchases of capital goods that businesses typically use to produce goods and services dropped by 3.9 percent.

In the first 11 months of 2024, the country’s import bill ballooned by 1.1 percent to $117.51 billion.

John Paolo Rivera, a senior research fellow at state-run think tank Philippine Institute for Development Studies, said the contraction in imports could be a symptom of “weaker domestic demand conditions.”

“A decline in capital goods imports may reflect businesses’ cautious sentiment toward future investments, possibly due to uncertainty in both domestic and global economic conditions,” Rivera said.

Exports decline

Meanwhile, export receipts fell by 8.7 percent in November to $5.7 billion, marking the third straight month of contraction.

Data showed this was the steepest slump in the value of outbound shipments since June 2024. Sales of electronic products, the Philippines’ top export product, collapsed by 20.8 percent in November, the PSA reported.

Year-to-date, export receipts amounted to $67.6 billion, down by 0.4 percent.

Leonardo Lanzona, an economist at Ateneo de Manila University, said the continued decline in exports should prompt the government to intervene by making the local manufacturing sector more resilient to the impact of climate change.

“Our exports are import-dependent, so we expect significant decreases in exports with the imports decreasing. One can try blaming the weather conditions for the fall in production. But manufacturing should not be susceptible to weather conditions, unlike agriculture,” Lanzona said.

“The absence of a comprehensive plan for manufacturing and trade in the face of climate change and reconfigurations in the global value chain is thus the binding constraint of our industrial sector, as markets do not work well in structural transformations,” he added.