The country’s trade deficit widened by 78.6 percent in May to a record $5.68 billion from the $3.180-billion shortfall a year ago on higher prices of oil imports and other global commodities.
Data from the Philippine Statistics Authority on Tuesday showed the trade deficit in the first five months also climbed to $24.922 billion from the $14.622-billion gap in the same period last year, weighing on the balance of payments and the value of the peso.
The peso closed at 56.37 against the US dollar Tuesday, the lowest in 17 years.
“The record-high trade deficit on a monthly basis at -$5.679 billion in May 2022 may have been bloated by elevated prices of imported oil and other major global commodities largely brought about by the Russia-Ukraine war since Feb. 24, 2022,” Rizal Commercial Banking Corp. chief economist Michael Ricafort told Manila Standard.
Balance of trade in goods is the difference between the value of exports and imports.
Ricafort said a more aggressive rate hike/monetary tightening by the US Federal Reserve could lead to US economic slowdown or even recession and eventually to lower global oil and other commodity prices. This would help reduce the Philippines’ bloated import bill and trade deficit, he said.
Ricafort also the weaker peso exchange rate versus the US dollar would lead to higher costs/prices of imports and would, at some point, reduce demand for imports and narrow the trade deficit.
The PSA said export rose 6.2 percent in May to $6.31 billion, while imports jumped 31.4 percent to nearly $12 billion.
Electronic products continued to be the country’s top export in May 2022 with total earnings of $3.47 billion. This accounted for 55 percent share of the total exports during the period.
Merchandise exports in the first five months grew 8.41 percent to $31.87 billion from $29.399 billion a year ago, while total imports climbed 29 percent to $56.80 billion from $44.02 billion in the same period last year.
The PSA said imports growth in May was mainly due to the increase in value of the top 10 major commodity groups, led by mineral fuels, lubricants and related materials with 128.7 percent. This was followed by cereals and cereal preparations which rose 65.7 percent annually; and iron and steel by 64.2 percent.
Most imported goods were electronic products with an import value of $2.78 billion or a share of 23.2 percent to the total imports in May. This was followed by mineral fuels, lubricants and related materials, valued at $2.26 billion (18.8 percent); and transport equipment which amounted to $908.95 million (7.6 percent).
Total external trade in goods amounted to $18.30 billion in May, up by 21.5 percent from the same month last year.
The trade-in-goods deficit hit $43.226 billion in 2021, wider than the $24.6-billion shortfall in 2020. The record trade deficit was registered at $43.5-billion in 2018.