The Philippines’ merchandise imports contracted by 9.6 percent year-on-year in May, reversing a 3 percent gain in the previous month.
The country’s economic planning body, the National Economic and Development Authority (NEDA), explained that lower payments for imported mineral fuels and lubricants and capital goods significantly outweighed sustained growth in imports of raw materials and intermediate and consumer goods during the month.
Imports payments slid to $4.765 billion from $5.272 billion in May 2013, according to data released by NEDA and the Philippine Statistics Authority (PSA). The negative growth in May was a reversal of the 3 percent year-on-year rise to $5.309-billion worth of imports posted in April.
According to PSA data, cumulative imports for the first five months amounted to $26.336 billion, up 5.9 percent compared with $24.862 billion in the same period of last year.
The PSA said the decrease in total imports for the period was because of the negative performance of four out of the top 10 major commodities for the month: mineral fuels, lubricants and related materials; cereals and cereal preparations; industrial machinery and equipment; and electronic products.
Of the major commodities that caused the decline in the country’s imports, inward shipments of mineral fuels, lubricants and related materials showed a remarkable 43.6 percent decrease (the equivalent of $513.98 million) compared to May 2013.
“The reversal in import payments for mineral fuels and lubricants in May 2014 from strong growth rates in the last two months significantly pulled down total imports. Moreover, sluggish importation of capital goods continued to weigh on imports outturn during the period,” said Economic Planning Secretary and NEDA Director General Arsenio Balisacan.
Despite successive contractions in capital goods imports since February 2014, the upward trend in the importation of raw materials and intermediate goods and consumer goods, which grew by 6.3 percent and 0.8 percent, respectively in May is indicative of the continuing confidence of both businesses and consumers, Balisacan stressed.
The NEDA chief added that the upbeat business outlook and the expansion plans of businesses in the industry sector for the next two quarters suggest that a recovery in capital goods imports may be expected in the near-term.
“The re-fleeting program of airline companies in line with increasing their flight routes and the government’s continuing efforts to augment power supply and to improve operational capability in search and rescue operations and in maritime law enforcement, are likely to boost merchandise imports in the coming months,” Balisacan said.
Meanwhile, Balisacan noted that the import of major food items declined despite current tightness in the domestic supply of food, indicating that the country has not taken advantage of trade opportunities to stem possible upward price pressures.
Balisacan also stressed that the government should firm up efforts to encourage businesses to invest in more capital goods as these are crucial for increasing the global competitiveness of Philippine firms, citing the increasing regional integration and competition expected with the full integration of Association of Southeast Asian Nations (Asean) Economic Community in 2015.
“In particular, higher importation of capital goods will make the technological know-how of domestic industries at par with other countries, and would likewise allow them to add greater value to Philippine-made goods,” Balisacan explained.
China remained the top source of the country’s imports with a 15.2-percent share, equivalent to $724.4 million. Other top sources were the United States, Malaysia, Japan, and South Korea.