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Philippines
Thursday, March 28, 2024

October imports hit $10b, push deficit to new record

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The country’s trade deficit continued to widen, as the monthly imports topped the $10-billion mark for the first time in October, data from the Philippine Statistics Authority show.

The trade deficit hit a record $4.21 billion in October, up from $2.59 billion a year ago, as imports’ growth continued to outpace that of exports. This was also bigger than the $3.7-billion shortfall registered in September.

Data showed that merchandise exports grew 3.3 percent in October to $6.11 billion from $5.91 billion in the same month last year.  It was also up from $6 billion in September.

Imports jumped 21.4 percent in October to $10.32 billion from $8.50 billion in October 2017. This was the first time that merchandise imports reached the $10-billion mark and exceeded the previous record of $9.75 billion in September this year.

Nicholas Mapa, senior economist of ING Bank, said the October trade balance was the widest in history. He said the trade deficit in October indicated that the current account would likely remain in the red for the fourth quarter of the year. 

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“Capital imports and raw material growth are not expected to slow down in the near term as imports feed the burgeoning economy. Raw materials used for construction continue to post healthy growth although we do see some hope on the horizon with raw materials used for electronic exports posting a rebound of 28.9 percent for October,” Mapa said.

The October print brought the ten-month trade deficit to $33.9 billion, up 14.2 percent from the deficit of $29.71 billion in the same ten-month period of 2017.  

“Robust import growth is yet another sign that the Philippines has moved into a new chapter in its growth story, requiring a shift in the country’s import dietary requirement.  In the past, import growth was driven largely by fuel and consumer goods with only sporadic flows of capital goods and raw materials outside those used for electronic exports,” Mapa said.

He said the current account would likely remain deep in the red with the peso looking to structural flows such as remittances ahead of the holiday season and the capital and financial account for support.  He said over the medium term, protracted current account deficits would  likely keep pressure on the local currency in 2019. 

The PSA said the 3.3-percent increase in exports in October was due to the increases in export sales of the seven of the top 10 commodities, including copper concentrates (167,014.3 percent); machinery and transport equipment (94.1 percent); fresh bananas (30.9 percent); other manufactured goods (24.3 percent);  manufactured articles, (23.8 percent); metal components (17.6 percent); and electronic products (0.6 percent).

The 21.4-percent increase in imports was driven by the positive growth in demand for cereals and cereal preparations (52.3 percent); mineral fuels, lubricants and related materials (45.4 percent); other food and live animals (33.6 percent); telecommunication equipment and electrical machinery (26.7 percent); miscellaneous manufactured articles (25.4 percent); plastics in primary and non-primary forms(24.9 percent); industrial machinery and equipment (21.5 percent); transport equipment  (18.4 percent); electronic products (14.8 percent); and iron and steel (7.8 percent).

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