The Philippines’ merchandise imports in April grew at a slower year-on-year pace of 3 percent compared with the expansion recorded a month earlier, but government and private-sector analysts still believe imports will rise toward the 9 percent target by year-end.
The country’s economic planning body, the National Economic and Development Authority (NEDA), explained that lower importation of capital goods was the main reason behind the slowdown.
Imports payments increased to $5.309 billion from $5.153 billion in April 2013, according to data released by the NEDA and the Philippine Statistics Authority (PSA).
The April rate of growth was significantly lower than the 8 percent year-on-year rise to $5.478 billion worth of imports posted in March.
Senior economist Victor Abola of the University of Asia and the Pacific (UA&P) said he was not surprised by the slow growth of imports in April. “[Imports] are a main casualty of the truck ban in Manila, which has slowed down the entry of vessels to the Manila international port and their unloading of cargo,” he explained.
According to PSA data, cumulative imports for the first four months totaled $21.530 billion, up 9.9 percent compared with $19.590 billion in the same period of last year.
The six top import commodities are plastics in primary and non-primary forms; iron and steel; telecommunication equipment and electrical machinery; mineral fuels, lubricants and related materials; organic and inorganic chemicals; and other food and live animals.
Growth in business demand
Despite April’s decline, NEDA expects payments for imports to expand in the coming months given expectations of growth in business and consumer demand.
“This expectation is backed by surveys conducted by the Bangko Sentral ng Pilipinas, which showed that the overall confidence index of businesses rose to 50.7 percent in the second quarter of 2014 from 37.8 percent in the first quarter, and is expected to be sustained in the third quarter,” said Economic Planning Secretary and NEDA Director General Arsenio Balisacan in a statement on Wednesday.
UA&P’s Abola said elevated prices of crude oil, and the need for higher imports of rice and other food products are bound to boost imports toward the 9 percent growth goal of the government.
Inward shipments of raw materials and intermediate goods reached $2.1 billion in April 2014, higher by 17.6 percent from $1.7 billion recorded in the same period a year earlier.
Balisacan attributed import costs in April 2014 to higher payments for imported raw materials and intermediate goods, mineral fuels and lubricants, and consumer goods.
The NEDA chief said that the double-digit growth rate of raw material and intermediate goods imports was mainly driven by the increase in inward shipments of semi-processed raw materials, enough to offset the 27.8-percent contraction in unprocessed raw materials inputs.
“Among semi-processed raw materials, materials and accessories for electrical equipment recorded a 44.6-percent growth, indicating a possibly much better performance of Philippine electronics exports in the coming months,” Balisacan added.
PSA said that receipts for mineral fuels, lubricants and related materials increased by 11.5 percent to $1.433 billion, while consumer goods’ import bill was valued at $615.41 million.
Capital goods crucial
NEDA explained that lower importation of capital goods, however, was the main reason for the slowing of the import growth rate. Payments for inward shipments of capital goods dropped 19.9 percent to $1.179 billion in April.
According to Balisacan, an increase in imports of capital goods may be expected in the near-term as a result of the expansion plans of businesses in the industry sector for the next two quarters.
“The re-fleeting program of airline companies in line with increasing their flight routes alongside the anticipated rise in purchases of power generating sets to augment the power supply in the country is expected to boost imports of capital goods,” he said.
Balisacan added that maintaining the current favorable market sentiment, together with accelerating implementation of the Yolanda reconstruction, will be crucial in inducing private sector investment in capital goods.
China remained the top source of the country’s imports with a 15.7-percent share, equivalent to $833.51 million. Other top sources were Saudi Arabia, South Korea, Japan, and the United States.