The country incurred a record trade deficit of $4.71 billion in November 2021, as the 36.8-percent growth in imports outpaced the 6.6-percent expansion in exports, the Philippines Statistics Authority said Tuesday.
Data showed that the trade deficit in November 2021 went up by 119.5 percent year-on-year, faster than the 96.2-percent increase in October.
This brought the total trade deficit in the first 11 months of 2021 to $37.9 billion, also wider than the $22.14-billion trade gap registered a year ago. In 2020, the trade deficit reached $24.597 billion.
The PSA said merchandise exports grew 6.6 percent in November to $6.27 billion, led by the increased shipments of coconut oil (up 95.0 percent), electronic equipment and parts (33.9 percent) and chemicals (31.8 percent).
Exports in the first 11 months of 2021 reached $68.37 billion, up by 15.2 percent from the same period in 2020.
Meanwhile, imports climbed 36.8 percent in November to $10.98 billion, on higher demand for medicinal and pharmaceutical products (up 231.1 percent), mineral fuels, lubricants and related materials (141.2 percent) and cereals and cereal preparations (132.4 percent).
The cumulative import value from January to November amounted to $106.30 billion, up 30.4 percent from the import value of $81.51 billion in the same period in 2020.
Rizal Commercial Banking Corp. chief economist Michael Ricafort said the increased foreign direct investments and infrastructure spending in preparation for the May 2022 elections could have led to faster growth in imports and wider trade deficit.
“Still near record low interest rates could have also encouraged more borrowings/fund-raising activities as long-term interest rates have already gone up from record levels posted in the latter part of 2020 and earlier in 2021, leading to increased investments and importation activities that entail new investments and expansion projects,” Ricafort said.
He said the trade deficit could be sustained at the $4-billion levels per month “for as long as global oil/commodity prices remain elevated amid continued disruptions in the global supply chains that could be aggravated by the more transmissible Omicron variant.”
ING Bank Manila senior economist Nicholas Antonio Mapa said the surge in imports was enough to push the overall trade balance deep into deficit territory.
“The November trade gap hit a record -$4.7 billion with strong growth recorded in almost all import subcategories. The Philippine economy continues to gradually reopen although new waves of COVID-19 could threaten to delay some of the recent progress,” Mapa said.
He said while imports rose across the board, one of the major factors for the stark widening of the trade gap was higher fuel imports.
“Costlier imported crude oil translated to overall fuel imports rising sharply, which in turn helped bloat the trade deficit to its current record high. With global crude oil prices staying elevated to open the year, the Philippines could continue to experience wider trade deficits in the near term,” Mapa said.
Mapa said a ballooning trade gap pushed the Philippine current account balance back into negative territory in 2021. He said this trend was expected to continue going into 2022.
“Despite the recent tightening of restrictions implemented to start the year due to the Omicron variant, economic reopening will likely be sustained as authorities look for creative ways to keep the economy up and running during periods of heightened mobility curbs,” Mapa said.