The Philippines’ trade deficit widened by nearly 184 percent in November from a year earlier as exports contracted mainly on lower shipments of manufactured goods, official data showed on Tuesday.
The trade gap in November was also wider than the $1.98 billion deficit in October.
“The balance of trade in goods (BOT-G) for the Philippines in November 2016 registered a deficit of $2.566 billion, higher than the $976.87 million trade deficit in the same month last year,” the Philippine Statistics Authority (PSA) said in a statement.
Exports fell by 7.5 percent to $4.73 billion, while imports accelerated by 19.7 percent to $7.29 billion, the PSA said.
In a separate statement, the National Economic and Development Authority (NEDA) attributed the drop in exports to a 10.6-percent decrease in the value of manufactured goods, mostly electronics—down 7.9 percent.
Socioeconomic Planning Secretary Ernesto Pernia said the surge in trade transactions with East Asia and the Association of Southeast Asian Nations (Asean) boosted the performance of imports, which also signaled an increase in the purchasing power of Filipinos.
Pernia said imports surged due to higher demand for capital goods, consumer goods, raw materials and intermediate goods, and mineral fuels and lubricants.
In the first 11 months of 2016, the trade gap expanded by 109 percent to $22.36 billion from $10.65 billion a year earlier.
Total merchandise exports in January to November dropped 5.2 percent to $51.36 billion from $54.16 billion.
Cumulative imports climbed 13.7 percent to $73.72 billion from $68.82 billion. The PSA said total trade in November grew by 7.3 percent to $12.03 billion from $11.21 billion a year earlier, pushing the 11-month to tal to $125.08 billion.
Imports may moderate
Although imports surged for the most part of 2016, Singaporean bank DBS said it is unlikely that growth will continue to remain above 10 percent.
For 2017, it said imports growth may moderate to 2 percent.
“Other than the high base effects, a couple of reasons are at play. On effective exchange rate basis, the peso has now lost more than 5 percent of its value since its 2016 peak,” it said.
Even if underlying demand remains strong, a weaker currency may weigh on import demand, at least on the margins, it explained.
“More importantly, inventory de-stocking looks imminent this year. This is set to moderate import demand for capital goods, strong growth of which has buoyed overall import growth over the past two years,” it added.
“While we are expanding our trade relations with potential markets, we need to further harness our existing free trade agreements and continue to push for reforms. This will improve our business environment and increase our attractiveness to foreign investors,” Pernia said.
The performance of agro-industry products are seen to further increase with renewed and improving relations with China and Russia.
Pernia said the positive global growth outlook, paired with the upcoming Asean integration, is the perfect opportunity to expand the exports portfolio.
“We must continue to develop our infrastructure and encourage product differentiation and quality upgrading to prepare our micro, small, and medium enterprises for the upcoming increase in demand from our new trading partners,” he added.