The country registered a record trade deficit of $6 billion in August, contributing to the depreciation of the peso against the US dollar this year, an economist said Tuesday
Data from the Philippine Statistics Authority showed the August deficit widened by 81.3 percent from the $3.310-billion shortfall a year ago and surpassed the $5.99-billion deficit in July.
This brought the trade deficit in the first eight months to $41.8 billion, or $17 billion wider than the $24.8-billion gap recorded in the same period last year.
Imports were nearly double the country’s export revenues in August. Exports fell 2 percent in August to $6.41 billion while imports surged 26 percent in the same month to $12.41 billion.
Rizal Commercial Banking Corp. chief economist Michael Ricafort said the trade deficit this year, “could reach more than $50 billion or even $60 billion [given the monthly average trade deficit of $5.2 billion for the first 7 months of 2022] vs. -$42.2 billion in 2021 and -$24.6 billion in 2020.”
“For the month of August 2022, the country’s trade deficit again widened to a record of -$6.003 billion on a monthly basis, as may have been bloated by elevated prices of imported oil and other major global commodities largely brought about by the Russia-Ukraine war since February 24, 2022, as well as the further re-opening of the local economy towards greater normalcy that fundamentally led to some pick up in imports,” Ricafort said.
Ricafort said the wider trade deficit partly weighed on the peso exchange rate in recent months that saw the peso touching the 59 a dollar on Monday before closing at 58.86 Tuesday.
“The record trade deficit may have fundamentally contributed to the weaker peso to new records recently; but it is considered a lagging economic indicator, since global crude oil prices already eased to the lowest in 7-8 months recently, or even lower since the start of the Russia-Ukraine conflict, thereby could help ease the country’s oil import bill as well as help ease inflationary pressures for the coming months,” he said.
Ricafort said alongside global crude oil prices, wheat and some global commodity prices also similarly eased in recent months due to risk of recession in the United States amid aggressive Fed rate hikes to bring down elevated US inflation and the continued lockdowns in China.
The PSA said exports earnings grew 4.4 percent in the first eight months to $51.16 billion. Electronics products continued to be the country’s top export in August, with total earnings of $3.66 billion.
Meanwhile, imports in the eight-month period climbed 26 percent to $92.97 billion.
