The Philippines’ trade deficit in March widened by more than a third of its size from a year earlier and from February, with demand for imports by a robust economy outpacing foreign markets’ absorption of the country’s exports, official data showed on Thursday.
“The balance of trade in goods (BOT-G) for the Philippines in March 2017…registered a deficit of $2.302 billion, higher than the $1.747-billion trade deficit in the same month last year,” the Philippine Statistics Authority (PSA) said in a statement.
Based on these figures, the trade deficit in March rose by 31.8 percent from the year-ago level. Compared with the $1.76-billion trade gap in February, the March balance expanded by 30.2 percent.
Exports in the March rose by 21 percent year-on-year to $5.57 billion, while imports surged by 24 percent to $7.88 billion, data from the PSA showed.
In the first quarter of 2017, the country’s trade deficit also expanded by 19.2 percent to $6.54 billion from $5.48 billion a year ago.
Current account deficit unlikely
An economist from University of Asia & the Pacific (UA&P) said it was unlikely the huge trade gap would drag the country’s current account, the main component of the balance of payments, into negative territory.
“Despite fears that the humongous trade balance may bring the country to a current account deficit, the average monthly trade deficit for the first quarter is below $2 billion or at $1.86 billion, and may likely be contained there for the rest of the year,” UA&P economist Victor Abola said.
The current account is the difference between a nation’s savings and its investment. It consists of transactions in goods, services, primary income and secondary income, and measures the net transfer of real resources between the domestic economy and the rest of the world.
Analysts from two foreign banks, DBS and HSBC, have said the Philippine current account balance was on track to a shortfall this year and next, as burgeoning domestic demand for imported goods continues to widen the trade deficit.
Citing PSA data, the National Economic and Development Authority (NEDA) reported that total trade grew to $13.46 billion in March, recording a 22.7-percent growth from $10.96 billion a year ago.
In the first quarter, total trade grew by 18.5 percent to $37.56 billion from $31.70 billion.
“Philippine trade during the first quarter of this year has been robust, growing a solid 18.5 percent. We are really optimistic that we can sustain this momentum in the coming months,” Undersecretary Rolando Tungpalan said in a NEDA statement issued after the release of the March trade data.
This brought the first-quarter growth in imports to 18.6 percent and exports to 18.3 percent, the NEDA reported.
Exports in March reached $5.6 billion, driven by sales of manufactured goods that recorded 16.5 percent growth, total agro-based products that saw 33.6 percent growth, and mineral products the jumped by 94.2 percent.
In terms of major markets, NEDA said exports were supported by the sharp increase in receipts from Hong Kong (38.9 percent), China (38.9 percent), South Korea (7.3 percent), Taiwan (17.5 percent), the United States (20.4 percent), and the European Union (56.2 percent).
In the same period, imports payments rose to $7.9 billion, led by purchases of capital goods, raw materials and intermediate goods, mineral fuels and lubricants, and consumer goods.
NEDA added that in terms of trade growth in March 2017, the Philippines overtook Indonesia’s 20.9 percent, Malaysia’s 20.4 percent, Vietnam’s 20.2 percent, and Thailand’s 13.8 percent.
“These figures support our view that the Philippines will be the fastest-growing economy among the Asean-5 this year,” said Tungpalan.
This could be anchored on recovering external demand and strong domestic consumption and investment activities, he added.
Asean-5 refers to the Association of Southeast Asian Nation’s five largest member-economies: Indonesia, Malaysia, the Philippines, Thailand and Vietnam.
“We aim to follow-through by forging stronger connections with our Asean neighbors as merchandise trade with them comprises a substantial share of 21.9 percent of our country’s total trade in the first quarter,” Tungpalan said.
Calling for “innovation-led developments,” he said that to fully leverage on the region’s economic growth, micro, small, and medium enterprises must be integrated in global value chains.
In a separate statement, Trade Secretary Ramon Lopez said the country benefited from “greater market opening in China with much improved relations.”
The March growth in exports was “remarkable” and could be attributed to a widening product range, he said.
“Merchandise exports reached $5.58 billion in March 2017, posting a remarkable 21 percent growth year-on-year,” Lopez said.
“This also represents a continuing cumulative improvement over the 17.36-percent growth posted for the first two months of 2017 over the same period in 2016,” he added.
Lopez noted that electronics exports in the first quarter reached $7.64 billion and accounted for more than half of merchandise exports.
“Export growth for the first quarter of the year can still be attributed to a broad range of products,” he said.
Lopez also cited export growth in office equipment (157.5 percent); communication radar (87.6 percent); control and instrumentation (33.4 percent); machinery and transport equipment (21.5 percent); and semiconductors (16 percent) during the first quarter.
WITH RAADEE S. SAUSA