Hongkong and Shanghai Banking Corp. said the Philippines’ trade deficit likely widened in October, as elevated imports continued to outpace exports growth.
HSBC in a report predicted that the country’s trade shortfall widened to $3.95 billion in October from $3.93 billion in September.
“We expect the Philippine trade deficit to widen further in October, driven by a continued slowdown in exports alongside elevated imports of capital goods and raw materials,” the bank said.
It said exports were dragged by softer shipments of light manufactures and machinery this year.
HSBC said imports likely grew 15.3 percent in October while exports might have declined 1 percent.
“Meanwhile, this year and next are likely to be the most import-intensive phases of infrastructure build-out, which means a further increase of the country’s current account deficit,” HSBC said.
The government is scheduled to release the trade balance data this week.
The country’s trade-in-goods deficit ballooned to $3.93 billion in September, on the back of a double-digit growth in imports and 2.6-percent decline in exports, the Philippine Statistics Authority said.
Data showed that total imports rose 26.1 percent to $9.75 billion in September 2018 from $7.77 billion in September 2017.
Merchandise exports fell 2.6 percent to $5.83 billion in September from $5.99 billion a year ago.
Trade in goods deficit hit $29.9 billion in the first nine months, 70.5 percent higher than $17.5 billion in the same period last year.
Economic Planning Secretary Ernesto Pernia said the growth in imports of capital goods could indicate that firms were making long-term investments.
“The import of raw materials and intermediate goods could also indicate the vibrancy of the manufacturing sector as it is expected to sustain its positive growth in the remaining months of the 2018,” Pernia said.