Trade deficit narrows to $812M from $862M in Jan
Philippine merchandise imports rebounded from the January slump with an 11.2 percent increase in February, marking their fastest annual growth pace in more than a year, preliminary data from the Philippine Statistics Authority (PSA) showed on Tuesday.
Given the preliminary import figures, the PSA said total trade in February resulted in a deficit of $812 million, narrowing from the $862 million gap recorded in January.
The cumulative deficit in the trade of goods in January to February 2015 also narrowed to $1.67 billion from the year-earlier $1.70 billion, although the new figure is still regarded as substantial, against which a private economist urged caution.
Highest imports since Jan 2014
The February 2015 increase in imports outpaced the 1.7 percent annual rise posted a year earlier and reversed the revised 12.4 percent drop seen in January this year.
The 11.2 percent increase in February is also the highest import growth rate on record for the Philippines since the 24.4 percent surge posted in January 2014.
Imports in February rose to $5.326 billion from $4.788 billion in the corresponding month of 2014, the PSA reported.
For the first two months of the year, however, cumulative imports dropped 1.8 percent to $10.545 billion from $10.743 billion a year earlier.
Electronic products lead 7 top imports
PSA data showed the increase in total imports for February was driven by strong local demand for seven out of the top 10 commodities for the month, namely miscellaneous manufactured articles; iron and steel; electronic products; cereals and cereal preparations; other food and live animals; industrial machinery and equipment; and plastics in primary and non-primary forms.
Accounting for more than 34 percent of all imports for the month, electronic products were the top commodities shipped in, costing $1.854 billion. Import of the items swelled 42.4 percent over last year’s figure of $1.302 billion.
‘Robust economic activity’
The National Economic and Development Authority (NEDA) said in a statement the rise in electronic products’ imports suggests robust economic activity in the construction and manufacturing sectors.
NEDA Officer-in-Charge (OIC) and Deputy Director General Rolando Tungpalan called attention to what he said was indicated by the increase in electronic products import: that there is upbeat domestic demand for such products, particularly for private consumption and investment.
Tungpalan said the Philippines appears to have bucked the downward trend in merchandise imports among most Asian economies, which he attributed to a strong consumer base and improved employment opportunities.
China was the top source of Philippine imports, accounting for 16.3 percent of the total value of inbound shipment in February, followed by the United States, Taiwan, Singapore, Japan, Germany, Thailand, South Korea, Malaysia, and Indonesia.
Looking ahead, Tungpalan said the NEDA expects the country’s imports performance to remain strong over the near term.
“If a similar trend in importation for the succeeding month continues, it will secure the government’s expectation of strong GDP [gross domestic product]growth for the year,” he said.
The government is targeting 7 percent to 8 percent GDP growth for this year.
Tungpalan added that the current oil price trend should also be seen as favorable to economic growth and a good opportunity for businesses to expand their investment.
The 18.7 percent contraction in mineral fuels and lubricants imports in February marks the commodities’ fourth consecutive month of declines. The cost of such imports fell to $666.7 million during the month from $819.6 million a year earlier.
‘Current account to face headwinds’
A bank economist, however, pointed to a need for caution on the trade deficit’s impact on current account.
Underscoring this deficit, Jeff Ng, Asia economist at Standard Chartered Bank, said it is likely to weigh on the country’s current account, a major component of the balance of payments.
“The bigger trade deficit in January and February suggests that the current account may face some headwinds in the first quarter, when coupled with slowing remittance growth,” Ng said, referring to the slowdown seen lately in remittances flowing in from Filipino workers overseas.