Trade gap widens to $4.38B in August

By Beatriz Marie D. Cruz, Reporter

THE PHILIPPINES’ trade gap widened year on year in August as growth in imports still outpaced the increase in exports, even as the value of outbound shipments was the highest in 11 months, the government reported on Thursday.

Preliminary data from the Philippine Statistics Authority showed that the country’s trade-in-goods balance — the difference between exports and imports — stood at a $4.375-billion deficit in August, 6.6% bigger than the $4.105-billion gap in the same month last year.

However, month on month, the trade gap shrank by 10.25% from the $4.88-billion deficit posted in July.

Year to date, the trade deficit narrowed by 4.35% to $34.3 billion from the $35.86-billion gap a year ago.

The country’s balance of trade in goods has been in a deficit for 111 straight months (over nine years) or since the $64.95-million surplus recorded in May 2015.

Total external trade in goods amounted to $17.87 billion in August, up 1.8% year on year. Of the total, 62.2% was imported goods, while the remaining 37.8% was made up of exports.

In August, export sales inched up by 0.3% to $6.75 billion from $6.73 billion in the same month in 2023, logging a second straight month of increase.

This was the biggest export value in 11 months or since the $6.77 billion in September last year.

Month on month, exports increased by 7.97%.

In the first eight months of the year, exports grew by an annual 2.27% to $49.41 billion.

Pantheon Macroeconomics Chief Emerging Asia Economist Miguel Chanco said in an e-mail that the rebound in exports seen since July “has been driven primarily by a comeback in demand from nontraditional markets and, to a smaller extent, recovering shipments to both the US and Japan.”

“By contrast, exports to China and Hong Kong have remained essentially flat in comparison.”

Meanwhile, the value of imported goods rose by 2.7% to $11.12 billion in August from $10.83 billion a year prior. Month on month, imports inched down by 0.02%.

Year to date, imports declined by an annual 0.55% to $83.7 billion.

Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort attributed the year-on-year increase in August imports to the peso’s appreciation versus the dollar.

“The faster growth in imports compared to exports may be partly attributed to the stronger peso exchange rate that made imports cheaper from the point of view of the locals, thereby increasing demand,” he said in a Viber message.

The stronger peso also made Philippine exports more expensive for international buyers, thus leading to a wider deficit, Mr. Ricafort added.

The peso closed at P56.111 versus the dollar at end-August, stronger by P2.254 from its P58.365 finish the previous month.

The Development Budget Coordination Committee (DBCC) projects 3% and 4% growth in exports and imports, respectively, this year.

KEY EXPORTS DECLINE
Manufactured goods, which accounted for 81.2% of the country’s export receipts, slipped by 0.6% to $5.48 billion in August from $5.51 billion a year ago.

Electronic products, which made up most of manufactured exports, declined by 8.2% year on year to $3.57 billion in August.

Semiconductor exports likewise dropped by 13.8% to $2.69 billion in August. Exports of mineral products slumped by 13.4% to $582.36 million.

The United States remained the top destination of Philippine-made goods in August with an export value of $1.22 billion, accounting for 18.1% of the total.

This was followed by Hong Kong with $942.56 million (14% of the total), Japan ($935.33 million or 13.9%), China ($849.38 million or 12.6%) and South Korea ($332.64 million or 4.9%). Other top export markets include the Netherlands, Singapore, Taiwan, Germany, and Thailand.

IMPORTS
Meanwhile, imports of raw materials and intermediate goods grew by 5.2% year on year to $4.06 billion in August. This made up 36.5% of total imports.

Imported capital goods picked up by 9.6% annually to $3 billion, while imports of consumer goods was steady at $2.24 billion.

Imports of mineral fuels, lubricants and related materials slid by 9.1% to $1.79 billion in August.

“Real import demand is still wobbling, with purchases of consumer goods remaining stagnant, at best, while demand for imported capital goods remains depressed,” Mr. Chanco said.

China was the biggest source of imports valued at $2.79 billion, accounting for a quarter of the total import bill in August.

It was followed by Indonesia ($972.4 million or 8.7% of the total), South Korea ($925.36 million or 8.3%), Japan ($827.11 million or 7.4%) and the United States ($707.33 million or 6.4%).