The trade deficit more than doubled in 2016 as exports contracted while imports grew in double-digit terms, official data showed on Friday.
Merchandise exports in January to December dropped 4 percent to $56.23 billion from $58.82 billion a year earlier, according to the Philippine Statistics Authority. Imports climbed 14 percent to $81.16 billion from $71.06 billion in the same comparable period.
As a result, the trade deficit hit $24.93 billion, 104 percent higher than the $12.24-billion shortfall recorded in 2015.
With higher infrastructure requirements and an uptrend in oil prices, an analyst said the trade gap would continue to widen this year.
In a statement, Socioeconomic Planning Secretary Ernesto Pernia said: “This means that we need to keep diversifying and exploring new markets, in addition to fully tapping our existing trade agreements to push further our upward trajectory.”
In December alone, the trade gap expanded by 61.7 percent to $2.564 billion from $1.58 billion a year earlier. It was marginally narrower than the $2.566 billion deficit in November.
Exports rebounded by 5 percent to $4.87 billion, while imports increased by 19 percent to $7.43 billion for a total trade of $12.3 billion.
Growth in all major commodities, led by agro-based products, petroleum and mineral products and manufactured goods, propelled exports, the National Economic and Development Authority (NEDA) noted.
“This demonstrates the recovery of our agricultural sector from the effects of the El Niño. It also indicates the positive contributions of mining and petroleum to the economy. This implies that we will have to find a wholesome balance between mining development and environmental protection,” Pernia, who is also the NEDA chief, said.
Imports grew with the expanding demand for capital goods, consumer goods, and raw materials and intermediate goods, despite the drop in mineral fuels and lubricants.
NEDA pointed out the increase in export receipts was largely brought about by shipments to China (36.6 percent) and Taiwan (10.5 percent), which offset declines in other markets.
Only Vietnam and the Philippines posted gains in merchandise trade as other selected Asian countries remained weak last year, it said.
“If we want to continue being in the forefront, we need to create policies that enhance and expand opportunities for industries, expand our infrastructure, and shift to a knowledge-based economy. We also need to push for reforms that will sustain growth such as the comprehensive tax reform package, which could provide additional impetus to consumption and investment,” said Pernia.
The country needs to instill a global mindset among micro, small and medium enterprises while providing them with a conducive business environment by addressing internal and external constraints to development and trade potential, the Cabinet official said.
These strategies are included in the proposed Philippine Development Plan 2017-2022, he said
Deficit to widen further
Emilio Neri Jr., Bank of the Philippine Islands vice president and lead economist, said he was looking at a further widening of the trade gap in 2017 as infrastructure-related imports start to kick in and oil prices stay above $50 per barrel.
This year, the government plans to spend more than P890 billion on projects that will be undertaken simultaneously in all regions, including small-, medium- and large-scale ventures.
The planned spending on infrastructure represents 5.2 percent of the P3.35 trillion national budget for 2017.
The government’s economic team is planning P8 trillion to P9 trillion in spending on infrastructure from 2017 to 2022.