Aug imports drop 1.3% on-year

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Philippine merchandise imports in August dropped from a year earlier, traced to two of the 10 major commodities for the month, data from the Philippine Statistics Authority (PSA) showed on Friday.

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Total import payments in August amounted to $5.494 billion, showing a 1.3 percent decline from the $5.564 billion value in the corresponding period in 2013.

Cumulative imports for the first eight months of the year, however, rose 4 percent to $42.446 billion from $40.810 billion in the same period a year earlier.

The PSA said the drop in total imports for the month was due to the negative performance of electronic products, which contracted by 15.4 percent, and mineral fuels, lubricants and related materials, which declined by 2.6 percent.

China remained the top source of imports, with an 8.9-percent share worth $806.52 million in August. Other top sources were the United States, Singapore, Taiwan and South Korea.

Worrisome trend
Nicholas Antonio Mapa, Bank of the Philippine Islands associate economist, said the contraction in imports may be attributed to two things: port congestion and the fall in crude oil prices.

“The recent truck ban in Manila had fomented port congestion and led to the artificial trade surpluses we’ve enjoyed for the previous two months. Given that most of our imports come in through Manila but leave through other ports in the country, we’ve seen months of strong exports but simultaneously weak imports, and thus the trade surpluses,” Mapa said.

Mapa noted that one worrisome trend that was seen so far is the contraction in imports despite months of robust export numbers.

“This would mean that we have continuously been drawing down on inventory, especially in our main stay sector of our export sector: electronics.  Given that we’ve seen months of outflow and no inflow, we would expect that these companies, after drawing down inventory of raw materials, would replenish and import more material,” he explained.

Mapa also suggested that the fall in mineral fuels and related products could be somewhat misleading.

“On the drop off in mineral fuels, this could be more due to the drop in dollar price of crude oil.  Since imports are recorded in dollar terms, this could mean that we imported the same amount of crude oil but it was valued as ‘lower’ because of its US dollar price,” he said, noting that oil prices in August last year closed to $105 per barrel, versus the $95 per barrel in August this year.

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