The country’s trade deficit shrank to $2.47 billion in June from $3.55 billion a year ago as exports rose and imports shrank for the third straight month.
Data from the Philippine Statistics Authority showed that merchandise exports grew 1.5 percent in June to $6 billion while imports plunged 10.4 percent to $8.48 billion from a year ago.
The trade deficit slightly improved to $19 billion in the first six months from $19.24 billion as total exports dropped 0.8 percent to $34.1 billion, while total imports fell 1 percent to $53.1 billion.
Nicholas Mapa, a senior economist at ING Bank Manila, said exports managed a third month of modest growth despite the trade war fears while import compression turned more severe with inbound shipments contracting by double digits.
“Given this dynamic, the trade balance showed a much tighter trade gap of -$2.47 billion, which coupled with strong remittance and BPO sector growth could see the current account deficit improve at least in the second quarter,” Mapa said.
“The relatively less severe trade gap could be one factor for the peso’s improved performance for the month although the contraction in capital imports could take off even more shine from the second-quarter GDP growth print,” Mapa said.
Electronic exports, accounting for 59 percent of the total, rose 4.3 percent in June to $3.54 billion. Shipments of copper metal jumped 41.7 percent while exports of fresh bananas climbed 24.4 percent in June.
Meanwhile, the lower imports in June were pulled down by decreased orders for iron and steel (-40.3 percent); cereals and cereal preparations (-29.4 percent); and industrial machinery and equipment (-20.7 percent).
The National Economic and Development Authority said that with global growth likely to remain sluggish for the remainder of 2019, the government should exert all efforts to boost domestic demand and exports’ competitiveness to improve the Philippines’ trade performance.
Economic Planning Secretary Ernesto Pernia attributed the external trade slowdown in part to the ongoing trade disputes, Brexit-related uncertainties and rising geopolitical tensions.
“Despite the challenging external environment, the Philippines has shown resilience in its trade performance. The Philippines is among the countries in Asia with positive export growth,” he said.
Neda said that in terms of exports earnings, only Vietnam and the Philippines registered gains among selected Asian economies.
“The government must continue promoting the competitiveness of the Philippine exports by implementing policies and laws such as the Philippine Innovation Act. This will encourage innovation that will reduce the cost of production and elevate the quality of Philippine products to meet international standards,” Pernia said.
“However, considering the less optimistic global trade prospects, it is necessary to diversify markets and boost domestic demand to compensate for the weakness of external trade,” Pernia said.