Philippine merchandise imports grew for the fourth consecutive month in September, gaining by a faster 6.7 percent year-on-year from August’s revised 5.7-percent increase.
A Cabinet official said this reflected strong domestic demand, a view supported by an analyst who noted that the result came amid sluggish activity elsewhere in the world.
The Philippine Statistics Authority (PSA) on Wednesday said improvements were recorded for seven out of the top 10 commodities, boosting overall imports to $6.17 billion from $5.783 billion a year earlier.
The country’s trade position hit a deficit of $1.230 million in September, wider than the $1.048 billion recorded in August and a reversal from the $63-million surplus recorded a year earlier.
Year to date, merchandise imports totaled $49.915 billion, up 2.3 percent from the $48.803 billion seen in January-September last year.
The trade deficit for the nine-month period increased to $5.634 billion from $4.404 billion a year earlier.
The National Economic and Development Authority (NEDA), in a statement, said
double-digit increases in the importation of raw materials and intermediate goods, and capital and consumer goods kept merchandise imports afloat.
The PSA reported that inbound shipments of capital goods increased to $2.014 billion from $1.43 billion in the comparable month. Raw materials and intermediate goods also grew by 20.1 percent to reach $2.7 billion.
“Raw materials and intermediate goods serve as inputs in the production of final goods, while capital goods include equipment and materials in which firms invest to expand production and make production more efficient,” Socioeconomic Planning Secretary Arsenio Balisacan said.
He said the 40.7-percent growth in capital goods was “an indication of robust economic activity moving forward.”
The import bill for consumer goods, meanwhile, increased by 10.1 percent to $876.8 million in September, mainly due to higher purchases of durable goods, particularly passenger cars and motorcycles.
“Upbeat sentiment from the business sector and an overall improvement in consumer expectations for the coming quarter will likely keep imports afloat, especially those in the manufacturing and construction sectors,” Balisacan said.
He added that improved purchasing power due to low inflation would also keep consumer demand vibrant in the succeeding months and would further be ramped up by holiday spending.
The NEDA, however, noted that payments for non-durable goods, primarily rice, registered a decrease during the period because of lower purchases.
“The drop in rice imports may only be temporary as the government allowed for additional rice imports in the fourth quarter of the year given the prevailing El Nino, which is still affecting domestic rice production,” Balisacan said.
Electronic products, meanwhile, remained the country’s top import with a 32.3 percent share. In value terms, the Philippines purchased $1.993 billion worth, up 34.7 percent from a year earlier.
China was the top source of Philippine imports in September, accounting for 15.3 percent of the total. Following were the United States, Japan, Taiwan, South Korea, Thailand, Singapore, Malaysia, Indonesia and Germany.
Among the monitored trade-oriented economies in East and Southeast Asia, only the Philippines and Vietnam recorded positive imports in September this year, Baliscan noted.
Supporting this view was Standard Chartered Bank economist Jeff Ng, who said imports for the month reflected a stronger domestic outlook compared to sluggish global demand.
“Import growth continues to be dragged down by capital goods imports. However, robust raw material and consumer imports suggest that domestic demand remained resilient,” Ng said.
“As a result, the trade balance is still higher in deficit compared to previous months,” he said.
Given sluggish global growth, the NEDA chief said the country’s economic policies should continue to encourage investments that cater to domestic demand.
“Continuous improvements in product quality, innovation and infrastructure support to local industries should be sustained in order to elevate the competitiveness of the domestic industries, and make them at par with imported products,” Balisacan said.
Local industries can also take advantage of lower prices of commodities in order to beef up inventory and expand capacity, he said.
“At the same time, the purchasing power of consumers, especially the poor, needs to be strengthened,” Balisacan said.