Philippine merchandise imports slid 14.2 percent in January from a year earlier, sustaining the decline in inbound shipments for the third consecutive month, with eight major commodities largely accounting for the fall, the latest government data shows.
Imports in January fell to $5.108 billion from $5.955 billion in the corresponding month of 2014, the Philippine Statistics Authority (PSA) reported on Wednesday.
The decline in January sustained the fall in Philippine imports for the third straight month at an increasing rate. In December 2014, the imports bill showed a 10.6 percent drop, accelerating sharply from a 1.7 percent dip in November.
The drop also exceeded the 13.3 percent slump in imports recorded nearly three years ago, in April 2012.
Drop in 8 major commodities
This time, the PSA listed eight out of 10 major commodities showing decreases in inbound shipment: transport equipment; mineral fuels, lubricants and related materials; iron and steel; organic and inorganic chemicals; plastics in primary and non-primary forms; industrial machinery and equipment; other food and live animals; miscellaneous manufactured articles.
Accounting for more than 14 percent of all imports for the month, mineral fuels, lubricants and related materials registered a 43.4 percent slide to $723.6 million from $1.28 billion a year earlier.
Lower oil value
The National Economic and Development Authority (NEDA) said in a statement the decline in January imports can be traced to lower payments for mineral fuels and lubricants, capital, and consumer goods.
“Lower oil prices primarily caused the imports bill to decline significantly in January 2015. Over the medium term, payments for imported crude oil may remain lower, tempering the total value of Philippine merchandise imports in 2015,” Socioeconomic Planning Secretary Arsenio Balisacan said.
The slight increase in purchases of raw materials and intermediate goods that comprised nearly half or 48.4 percent of the country’s total imports, was not enough to make up for the reduction in payments for imported mineral fuels and lubricants, capital goods and consumer goods in January, the NEDA said.
“With oil inventories remaining at high levels and with moderate global growth projections continuing to limit energy demand, it may take time for crude oil prices to fully recover to the more than US$100 per barrel annual average price in 2011 to 2013,” said Balisacan, who is also NEDA director-general.
Top import, top suppliers
Electronic products remained the country’s top imported commodity in January with a 32.4 percent share of total imports and value of $1.655 billion. The bill rose 28.3 percent from $1.290 billion in January 2014.
China remained the top source of Philippine imports, accounting for 15.4 percent of the total value of inbound shipment in January, followed by Singapore, the United States, Germany, Japan, Taiwan, South Korea, Thailand, Saudi Arabia, and Malaysia.
Slowing investment demand
“Slowing demand for investment goods was also to blame. We believe the decline in imports will offset sluggish external demand, which has dragged down export growth in January. The trade deficit narrowed in January,” HSBC economist Trinh Nguyen said.
The country’s trade-in-goods deficit in January narrowed by half to $800 million from $1.6 billion in the comparable month last year due to the steeper decline in import payments, according to the PSA data.
Despite the decline in January, the NEDA remains bullish about future demand for raw materials and intermediate goods, capital goods, and consumer items in the coming months to supply the requirements of business expansion plans.
“Our prospects for the business sector, including export-oriented industries, remain largely positive, especially in the quarter ahead, as more businesses have expressed their interest to expand operations, especially in the manufacturing sector,” Balisacan said.
Consumer spending is also seen likely to remain upbeat, in line with increases in income opportunities as reflected in the January 2015 employment numbers, the NEDA chief added.
Earlier this month, the Labor Force Survey (LFS) showed a modest improvement year-on-year in January employment to 93.4 percent from 92.5 percent, representing 2.8 percent growth in the number of employed Filipinos from 36.4 million in the January 2014 survey to 37.5 million in the latest survey round.