July growth slows to 16.9% from 22.6% in June
After bouncing back in June from three consecutive months of decline, Philippine merchandise imports lost momentum in July to post growth of 16.9 percent from a year earlier, slowing from a 22.6 percent rise the preceding month, the latest government data showed on Wednesday.
The total value of imports in July rose to $6.504 billion from $5.564 billion a year earlier, according to preliminary figures from the Philippine Statistics Authority (PSA).
The government report did not cite reasons for the slowdown from June. Focusing on the year-on-year expansion, it said nine of the 10 major imported commodities posted positive increases.
Accounting for more than 30.8 percent of the receipts in July, electronic products remained the top commodity group imported during the period, with value rising 71.1 percent to $2.003 billion from the year-earlier level of $1.170 billion.
Growth in July’s inbound shipments was also traced to commodities such as power generating and specialized machinery, transport equipment, industrial machinery and equipment, miscellaneous manufactured articles, other food and live animals, telecommunication equipment and electrical machinery, iron and steel, and plastics and primary and non-primary forms.
For the first seven months of 2015, cumulative imports totaled $37.228 billion, up a slight 0.1 percent from $37.175 billion in the same period of last year.
July trade deficit
Without specifying the exports figure for July, the PSA report showed the Philippine trade position at the end of the month showed a widening of the deficit to $1.177 billion from $554 million in the month earlier.
China was the top source of Philippine imports in July, accounting for 19.1 percent of the total value of the country’s imports that month, followed by the United States, Japan, Taiwan, Thailand, Singapore, Malaysia, South Korea, Indonesia, and India.
For the seven-month period to July, the trade deficit rose to $3.014 billion from $1.516 billion deficit during the same period in 2014.
The National Economic and Development Authority (NEDA) did not fail to see an upside to the imports performance in July.
“If you look at the composition of the July imports, most are raw materials and capital goods. This is a good indicator of future economic activity,” Economic Planning Secretary Arsenio Balisacan told reporters on the sidelines of a NEDA forum dubbed “Towards Zero Poverty” held in Mandaluyong city on Wednesday.
Citing the double-digit imports rise in June and July, Balisacan said imports are likely to hit the 2 percent target of the government this year.
“In the last two months, imports were up… It’s positive, so I suspect that the rest of the year will be quite positive, too,” Balisacan, who is also the NEDA director general, said.
Exports, which have remained sluggish in line with the slowdown in the global economy, primarily China, may also be expected to improve before the yearend, Balisacan said.
“Hopefully, our trading partners will perform well in the coming months and exports will improve,” he said.
Warning about Q3
An economist from the Bank of the Philippine Islands (BPI) said the significant pick-up in merchandise imports in July looked quite encouraging for production, but based on the nature of the materials imported in the month, may have negative impact on the economy in the third quarter.
“The items contributing to growth are largely capital goods and raw materials—which seem to suggest that the outlook for production going forward looks bright,” Emilio Neri Jr., BPI vice president and lead economist, said.
Despite the easing in July, the Philippines’ double-digit import growth still outperforms most of the other economies in Southeast Asia. According to the NEDA, the Philippines ranked first among monitored economies in East and Southeast Asia in registering imports growth in July 2015.
Except for Vietnam, most trade-oriented economies in the region recorded a decline in imports for the period, it said.
“This may, however, drag our third-quarter 2015 gross domestic product print,” Neri said, referring to the impact of the Philippines’ imports growth on its net exports.
“Hopefully though, national spending will be strong enough to outweigh the negative contribution of rapid import growth,” he said.