Philippine merchandise imports continued to fall in June, but the decline eased to 3.6 percent year-on-year from May’s revised 4 percent contraction, fresh data from the Philippine Statistics Authority (PSA) shows.
Import payments dropped to $4.716 billion in June 2014 from $4.890 billion in the corresponding period in 2013.Cumulative imports for the first half of the year rose 5.4 percent to $31.346 billion from $29.752 billion in the same period a year earlier.
The PSA said three of the top 10 major commodities—industrial machinery and equipment, electronic products, and other food and live animals—recorded lower imports during the month, accounting for the decline in June imports. Imports of industrial machinery and equipment slid 32.9 percent to $211.97 million from $315.81 million in June last year.
Electronic products imports fell 22 percent to $1.097 billion from $1.097 billion a year earlier.
Imports of other food and live animals fell 3.3 percent to $156.23 million from $161.64 million last year.
In a separate statement, the National Economic and Development Authority (NEDA) said the drop in imported capital goods pulled down overall merchandise imports, offsetting the year-on-year gains recorded in imports of mineral fuels and lubricants, raw materials and intermediate goods, and consumer goods.
NEDA said the value of imported capital goods dropped 27.2 percent to $1 billion in June from $1.4 billion a year earlier, marking its fifth consecutive month of contraction since February this year.
Capital goods are durable goods such as equipment and machinery that are used in the production of other goods.
Economic Planning Secretary and NEDA Director General Arsenio Balisacan called for firm efforts to encourage businesses to invest more on capital goods because these are crucial in increasing the global competitiveness of domestic firms.
“The decline in the country’s imports of capital goods is a concern that needs to be addressed,” Balisacan said.
The port congestion in Manila may be a contributing factor to the decline in imports and should be expeditiously resolved, the NEDA chief said.
“Logistical issues result in additional cost to both producers and consumers, especially for raw materials and capital goods intended for production as well as food and other non-durable items for consumption,” he said.
Sharing the same view, University of Asia and the Pacific economist Dr. Victor Abola said the contraction of imports in June was primarily due to the Manila truck ban and the consequent congestion at the Manila ports.
“According to insiders, incoming containers are about 4,000 daily, while only 2,000 are being withdrawn. This will necessarily impact on import figures,” Abola said.
Meanwhile, Bank of the Philippine Islands associate economist Nicholas Antonio Mapa said that although lower imports can be considered a positive indication of economic growth, it was also considered as a negative factor that would eventually affect export growth.
“The initial effect of a contraction in imports would be better-looking GDP [gross domestic product]figures for the second quarter of the year as imports are a drag on GDP growth accounting,” he said.
“However, the fall off in imports also means that raw materials for processing that will eventually be turned into exports may also be depleted soon, which could lead to a contraction in exports going forward,” he said.
China remained the top source of imports with a 17.2-percent share worth $809.64 million. Other top sources were South Korea, Japan, and the United States.