The trade deficit widened to $3.76 billion in January from $3.16 billion a year ago, as imports rebounded while exports continued to decline, data from the Philippine Statistics Authority show.
The government should step up efforts to strengthen relations with trade partners to further increase market access amid easing global demand, the National Economic and Development Authority said on the release of the trade figures for January.
Merchandise trade rose 2.9 percent to $14.3 billion in the first month of the year, reversing the negative outturn in December 2018.
January’s trade performance was largely due to a rebound in imports which grew 5.8 percent to $9 billion, supported by increases in the import values of consumer goods, capital goods and raw materials and intermediate goods.
Exports recorded a 1.7-percent drop to $5.3 billion, as lower receipts from manufactures and minerals offset the gains in exports of forest and total agro-based products.
“The Department of Agriculture is currently in talks with Singapore, Russia and Monaco for possible arrangements to increase Philippine agricultural export products to these countries,” Economic Planning Secretary Ernesto Pernia said.
Pernia said exporters should explore opportunities in emerging sectors and to respond to increasing market demand for other non-traditional exports to broaden exports base.
“Also, the likely conclusion of the Regional Comprehensive Economic Partnership agreement this year will be a welcome development,” Pernia said.
The RCEP aims to achieve greater market access for goods, services and investments and provide business-friendly and trade-facilitative rules for businesses and investors among its 16 member economies.
Nicholas Mapa, ING Bank Manila senior economist, said imports would likely continue to grow, albeit at a more subdued pace in 2019 with the fuel import bill seen to contract (given the dollar price of oil versus 2018) and with both the capital goods and raw materials account likely at or past peak.
“Elevated borrowing costs may have been hampering some of the capital expansion although given the prospects for the economy, corporates and the government remain bullish with capital outlay plans announced,” he said.
Mapa said outbound shipments remained heavily dependent on the electronics trade, “but the rise in raw materials imports for electronic exports appears to be increasing in dollar terms, which should give hope for a turnaround in 2019.”
“However, given the ongoing trade war, the Philippine export sector will need to continue to build on sector changing reforms to help boost productivity by enhancing supply chains and increasing standards.,” he said.
Mapa said with the government’s ‘Build, Build, Build’ initiative seen to help boost efficiencies, the export sector could take advantage of this push and “we can see the export renaissance that we’ve all been waiting for.”
Electronic products continued to be the country’s top export with total earnings of $2.79 billion. This amount, which comprised 52.9 percent of the total exports’ revenue in January 2019, went up 1.7 percent from $2.74 billion export receipts in the same month in 2018.