Exports tumbled 35.6 percent in May to $3.99 billion from $6.20 billion a year ago as result of border restrictions imposed by the government to contain the coronavirus pandemic.
“The annual drop in May 2020 was the third month that total exports were consecutively declining,” the Philippine Statistics Authority said.
Data, however, showed the export contraction in May eased from the 50-percent drop in April, which the National Economic Development Authority said was an indication of a slight improvement in trade performance.
“The slower decline in trade performance is a welcome indication that economic activity has started to pick up with the relaxation of quarantine measures in certain areas, the gradual reopening of business, and the restarting of production in both the country and its trading partners,” said NEDA director-genera Karl Kendrick Chua.
Chua said export of manufactured goods, which account for almost 80 percent of total exports, were expected to gradually recover as the latest results of the Purchasing Managers’ Index for the Philippines rose from 40.1 in May to 49.7 in June.
The Semiconductors and Electronics Industries in the Philippines Inc. also indicated a gradual pick-up in semiconductors exports in the coming months and projected a flat growth in 2020, notwithstanding the on-going lockdown in Cebu where some of the electronics firms are located.
Meanwhile, imports fell 40.6 percent in May to $5.85 billion. The decline was an improvement from the 65.3-percent drop in April.
The total external trade in goods in May amounted to $9.84 billion, down by 38.7 percent from a year ago. With imports falling faster than exports, trade deficit declined 49 percent to $1.87 billion in May from the $3.64-billion shortfall a year earlier.
This brought the trade deficit in the first five months to $9.842 billion, down 45 percent from $17.788-billion in the same period last year.
ING Bank Manila senior economist Nicholas Antonio Mapa said the ill effects of the pandemic-induced lockdowns continued to surface with trade data for May showing yet another month of steep contractions for both exports and imports.
“The narrowing of the trade deficit, driven in large part by import compression translates to anemic demand for the dollar with corporations looking to hold on to peso liquidity given the uncertainty. The bleak economic outlook means that most investors will likely shelve capital-intensive plans for the time being or until economic conditions improve,” Mapa said.
“Thus we expect the trade balance to remain in deficit but far from the 2019 norm of more than -$3 billion, which will likely translate to an improvement in the current account balance. This development will be supportive of the strong-peso story for now but it also highlights fading potential output which could mean that the Philippine economy his headed for a protracted economic slump,” Mapa said.
Trade deficit narrowed by 15 percent to $37.049 billion in 2019 from $43.533 billion in 2018 on stronger export numbers.
Exports slightly improved by 1.47 percent to $70.32 billion in 2019 from $69.3 billion in 2018, while imports dropped 4.8 percent to $107.37 billion from $112.84 billion.