February imports rose 2.7% to end 22-month downtrend

Imports rose 2.7 percent in February from a year ago to end a 22-month downtrend on higher purchases of electrical machinery and telecommunication equipment, the Philippine Statistics Authority said Wednesday.

Data showed imports reached $7.6 billion in February, up from $7.4 billion registered in the same month last year, despite the prolonged coronavirus pandemic.

“The value of imports in February 2021 registered a positive annual growth rate after registering a downward trend from May 2019 to January 2021,” the PSA said.

Imports fell 12.1 percent in January and 7.3 percent in February 2020.

“The annual increment of imported goods in February 2021 was due to the increase in seven of the top 10 major commodity groups which was led by telecommunication equipment and electrical machinery [23.2 percent]. This was followed by other food and live animals [13.7 percent]; and plastics in primary and non-primary forms [8.8 percent],” the PSA said.

Total imports in the first two months declined 5.6 percent to $16 billion from $16.96 billion a year ago. Most imported goods were electronic products with an import value of $2.12 billion or 27.9 percent of total imports. This was followed by transport equipment, valued at $759.29 million.

ING Bank Manila senior economist Nicholas Mapa said the rebound in imports might be “more a result of base effects rather than a true recovery for the sector with the economy still stuck in recession amidst an ongoing 12-month lockdown with daily COVID-19 infections spiking in March.”

“Inbound shipment of goods and services will continue to expand in the coming months, benefiting from a favorable base and with manufacturers replenishing depleted inventories. And although we’ve seen growth in raw materials and capital goods, overall investment activity in the Philippines remains soft with corporates and households postponing expansion activities until the economic outlook improves,” Mapa said.

Meanwhile, exports continued to show signs of recovery. Data showed that export sales fell 2.3 percent in February, representing an improvement from the 4.8-percent drop in January.

The cumulative export earnings from January to February amounted to $10.83 billion, down by 3.6 percent from a year earier.

“Exports may face some challenges in the near term with global trade expected to take a hit after select countries reinstate lockdowns to deal with spiking COVID-19 cases in their areas. Despite these trends, we expect the trade deficit to remain modest compared to pre-COVID-19 averages which should translate to a current account surplus and near-term support for the peso,” Mapa said.

Factory production, however, remained sluggish in February. The PSA said the volume of production index shrank 43.6 percent in February, faster than the 12-percent decrease in January.

“The downturn in VoPI was brought about by the contractions in the indices of 19 industry divisions. Among these, the top contributor was manufacture of coke and refined petroleum products [-85.4 percent],” it said.

The value of production index also slid 46.5 percent in February, steeper than the 16.7-percent decline in January.

“The decline in VaPI for manufacturing sector in this period was due to the negative annual growth rates in the indices of 20 out of 22 industry divisions. Of these, manufacture of coke and refined petroleum products was the major contributing factor with -89.3 percent decline,” the PSA said.

Topics: Philippine Statistics Authority , Nicholas Mapa , coronavirus pandemic , ING Bank Manila
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