Philippine merchandise imports are likely to grow more slowly this year given an expected 30 percent drop in the country’s oil import bill, an analyst with ING Bank Manila said.
“The likelihood of modest growth in imports this year is high at best,” said Joey Cuyegkeng, economist at ING Bank Manila said in his latest market views released on Tuesday.
The economist projected that this year’s oil import bill could be 30 percent lower than the $13 billion recorded in 2014.
With this scenario, he said it would mean a narrower trade deficit at worst or a $2 billion surplus this year.
In 2014, aggregate imports registered a 2.4 percent increase to $63.923 billion in 2014 from $62.411 billion in same period of 2013.
Full-year growth in the country’s merchandise imports relative to the country’s strongly performing merchandise exports reduced the trade-in-goods deficit in 2014 to $2.1 billion from $5.7 billion in 2013. The 2014 balance was the narrowest trade gap recorded since 2001.
Despite statements from Malacanang Palace that operations at the Port of Manila have normalized and congestion has been resolved, the National Economic and Development Authority (NEDA) said port congestion remains a significant risk for both exports and imports growth.
More lasting solutions to port congestion and other transportation and logistics issues need to be in place, specifically in Metro Manila where about 25 percent of all imports arrive in the country, the NEDA said.
What could sustain imports are domestic consumption and investment, the agency said.
At the same time, the NEDA is optimistic that manufacturing is likely to continue its growth momentum, thus, keeping imports of raw materials and intermediate goods brisk.
Stable prices, the availability of jobs and more vigorous business activity are seen further increasing consumption spending that could support healthier demand for imports of consumer products, it said.