THE Philippines’ trade deficit widened in August as imports recovered following two months of decline, the Philippine Statistics Authority (PSA) reported on Tuesday.
Exports rose by 9.3 percent to $5.5 billion year-on-year, while imports grew 10.5 percent to $7.92 billion.
Year to date, however, the trade deficit narrowed by 2.6 percent to $17.04 billion from $17.50 billion.
“The widening of the trade deficit is good for growth … as it indicates strong domestic demand. But this will put pressure on the current account and ultimately the peso,” Natixis senior economist Trinh Nguyen said.
For Land Bank of the Philippines market economist Guian Angelo Dumalagan, “the balance of trade is still generally expected to subtract fewer points to the country’s GDP [gross domestic product]growth in the third quarter and for the entire 2017.”
NEDA urges reforms
The National Economic and Development Authority (NEDA), for its part, called for productivity-enhancing reforms that would help sustain the country’s trade gains.
Citing PSA data, the NEDA said the country’s total trade grew by 10 percent in August 2017, a significant jump from June’s 1.5 percent and July’s 2.5 percent.
“To help enhance this trade productivity, it is important to follow through with reforms that will develop the country’s potential in digital trade and e-commerce,” NEDA officer-in-charge Rolando Tungpalan said in a statement.
One example is the Philippine Customs and Trade Facilitation Project, a $20- million World Bank-financed modernization plan for the Bureau of Customs.
Tungpalan also pointed to TradeNet, an online trading platform targeted to be operational by December that will enable faster cross-border data exchanges among Association of Southeast Asian Nations member states.
Approval of the Ease of Doing Business Act, or the Fast Business Permit Act, will further streamline processes and reduce transaction costs in starting and operating a business in the country, he said.