The Philippines incurred a trade deficit of $3.51 billion in August and $26 billion in the first eight months, as imports continued to outpace exports, data from the Philippine Statistics Authority show.
The August deficit was higher than the $2.74-billion shortfall a year ago, but slightly lower than the $3.55-billion deficit in July. The eight-month deficit also eclipsed the $15.8-billion negative trade balance a year ago.
“Amid global challenges, government must continue supporting key and emerging export sectors to maintain the country’s trade growth,” the National Economic and Development Authority said.
Merchandise exports grew 3.1 percent in August to $6.16 billion, while imports climbed 11 percent to $9.68 billion from $8.72 billion.
Data showed that total exports in January to August declined 2 percent to $44.9 billion, while cumulative imports increased 15 percent to $70.9 billion.
“In order to sustain the country’s trade growth, targeted interventions that aim to mitigate vulnerabilities, increase production capacities, and level up coping strategies to global market trends and shocks must be put in place,” Neda Undersecretary Rosemarie Edillon said.
Exports continued its third month of gradual recovery at 3.1 percent in August, from a nearly flat performance of 0.3 percent the previous month. This was buoyed by electronic products, mineral products, and fruits and vegetables.
The PSA said the 3.1-percent growth in exports was due to the increases posted by six out of the top 10 commodities, led by cathodes and sections of cathodes, of refined copper (79 percent); fresh bananas (46.9 percent); other mineral products (21.8 percent); electronic products (7 percent); other manufactured goods (6.4 percent); and electronic equipment and parts (5.4 percent).
Edillon said key strategies to improve the overall climate for export development were identified in the Philippine Export Development Plan 2018-2022.
These include removing unnecessary regulatory impediments, raising productivity and competitiveness of Philippine enterprises, upgrading export quality and standards, improving access to trade finance and enhancing export sectors’ innovative capacities.
“The immediate implementation of the Ease of Doing Business Act will also be vital in attracting competitive firms to enter the country’s exporting industry. The approval of the 11th Foreign Investment Negative List should further ease restriction on foreign investments and prop-up domestic economic activity,” Edillon said.
Meanwhile, growth of imports slowed to 11 percent from 31.6 percent in July 2018.
Imports growth softened because of weaker purchases of capital goods, raw materials and intermediate goods, and consumer goods.
Edillon said the total import bill was expected to accelerate further in the coming months driven by capital goods to support the ‘Build, Build, Build’ program. Payments for oil will also be higher as international prices push upwards the costs of importation.
She said global growth was projected to remain steady at 3.7 percent in 2018 and 2019 based on the latest International Monetary Fund outlook as of October 2018.
“As trade tensions mount between the US and China, some manufacturing firms may seek to relocate their production, especially to Southeast Asia. This opens up opportunities for the Philippines to become a viable destination for export-oriented firms,” she said.