The Philippines’ trade deficit widened by 39.2 percent in July from a year earlier, with the latest government data showing both exports and imports falling as the global economic recovery failed to gain momentum.
“The balance of trade in goods (BOT-G) for the Philippines in July 2016 registered a deficit of $2.053 billion, higher than the $1.475 billion trade deficit in the same month last year,” the Philippine Statistics Authority (PSA) said in a statement released with the trade data.
Export sales in July dropped 13.0 percent year-on-year to $4.673 billion from $5.371 billion, while total imports slipped 1.7 percent to $6.726 billion from $6.846 billion.
The trade gap in July, however, was little changed, or just slightly narrower than the $2.098 billion deficit recorded for June this year.
Total revenue from trade that month dropped to $11.4 billion from $12.2 billion a year earlier.
Weak global recovery
The National Economic and Development Authority (NEDA) traced the decline in total merchandise trade to the 13 percent drop in exports, as global economic recovery remains slow.
“We must continue to upgrade and improve our industries to ensure their competitiveness and resiliency to shocks,” Socioeconomic Planning Secretary Ernesto Pernia said in a statement.
NEDA noted imports also dropped on weak local demand for raw materials and intermediate goods, as well as mineral fuel and lubricants.
Meanwhile, exports fell on the back of lower demand for Philippine products from traditional markets such as Japan, China, Hong Kong and the US, the NEDA said.
“We must continue to expand our presence in non-traditional markets to reduce our dependency on traditional markets,” Pernia said.
Similarly, Bank of the Philippine Islands (BPI) Vice President and lead economist Emilio Neri Jr. sees weakening global demand behind the decline in the country’s exports.
“We continue to see exports decline for 16 straight months, bringing the trade deficit to nearly $14 billion in the first 7 months. This is partly due to a persistent weakening of global demand and an uncompetitive currency,” Neri said in an e-mail
Stronger exports to non-traditional markets
Citing data from the PSA, the NEDA, however, pointed out increases in exports to the country’s non-traditional markets, particularly France and Mexico, which it said, grew by 59.2 percent and 22.4 percent, respectively.
PSA noted that 49.9 percent of the country’s merchandise exports in July went to countries in the East Asian regions such as China, Hong Kong, Japan, Macau, North Korea, South Korea and Taiwan. This translates to a value of $2.3 billion, an 11.1 percent decline from last year’s $2.622 billion.
Japan was named the top export destination for July, accounting for 19.5 percent of the country’s total exports, with export receipts valued at $3.963 billion.
Asean accounts for 14.5% of PH exports
Meanwhile, Asean member countries such as Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, Singapore, Thailand and Vietnam accounted for 14.5 percent of the total Philippine exports at $678.94 million in July.
“This registered a decrease of 25.9 percent from $915.71 million posted in same month a year ago,” the PSA said.
Exports to European Union member countries comprised 12.3 percent of total Philippine exports. This translates to a value of $576.65 million, down 6.1 percent from $613.99 million posted in July 2015.
Electronic products remain top export/import
Electronic products remained the country’s top export, accounting for 51.4 percent of the total exports revenue in July, the PSA said. This was despite the 14.8 percent decline in total receipts to $2.4 billion from $2.82 billion posted last year.
Pernia noted that despite the decline in value, the government remains optimistic in its outlook for the electronics sector, particularly semiconductors.
“We must take advantage of this and beef up the capacity of the electronics industry for production, research and development, and design, to enable us to keep up with the imminent increase in demand,” Pernia said.
Electronic products also remained the top import in July 2016. The PSA noted that inbound shipments of electronic products accounted for 27.2 percent of the total import bill at $1.828 billion, a drop from last year’s $1.989 billion.
Most imports from China
People’s Republic of China remained the country’s biggest source of imports as it accounted for 19.1 percent of the total import bill, at $1.287 billion. This reflects an 11.2 percent increase from $1.157 million in July last year.
Revenue from the country’s exports to Taiwan reached $520.93 million, generating a total trade value of $1.808 billion and $766.16 million trade deficit, the PSA said.
Meanwhile, on an economic bloc basis, the East Asia region was the biggest source of the country’s imports as it accounted for 48.5 percent of total imports. This translates to a value of $3.263 billion, a 6.6 percent increase from last year’s $3.063 billion.
Imports from Asean member countries accounted for 24.4 percent of the total imports at $1.640 billion, a 1.7 increase from the $1.612 billion recorded in July 2015.
In contrast, imports from the European Union dropped 21.1 percent to $494.91 million from last year’s $627.10 million.