The country’s trade gap shrank in September from its month- and year-earlier figures as imports outpaced exports, the Philippine Statistics Authority (PSA) reported on Wednesday.
Preliminary data from the statistics agency showed that inbound shipments in the month contracted for the 17th straight month to $7.92 billion, 16.5 percent smaller than the $9.48 billion in September 2019. Outbound shipments expanded for the first time since March by 2.2 percent to $6.22 billion from $6.07 billion year-on-year.
This resulted in the trade balance hitting a shortfall of $1.70 billion in September, smaller than the $1.83 billion in August and $3.4 billion a year earlier.
The decline in the value of imports was blamed on the year-on-year drop in several major import commodities, led by transport equipment (-53.0 percent); mineral fuels, lubricants and related materials (-51.4 percent); and industrial machinery and equipment (-23.3 percent).
The increase in the value of exports was attributed to the year-on-year jump in shipments of metal components, chemicals, cathodes and sections of cathodes of refined copper (133.9 percent); other mineral products (73.3 percent); electronic equipment and parts (32.9 percent); other manufactured goods (5.4 percent); and electronic products (0.8 percent).
Year-to-date, the country’s trade deficit slimmed to $16.1 billion from $30.5 billion in the same period last year, but expanded from the adjusted $14.4 billion in the first eight months.
In a comment, ING Bank Manila senior economist Nicholas Antonio Mapa described the September shortfall as “positive” for the peso, but not for the country’s gross domestic product.
“The Philippine trade deficit continues to tighten, given stark import compression [and] driven by a broad-based decline in economic activity,” Mapa said, adding that the contraction “helped the current account swing back into surplus, which remains a positive for [the peso] in the near term.”
“However, the sustained downturn in [the] imports of raw materials and capital goods points to a continued deterioration in productive capacity and potential output, which does not bode well for prospects for the economic recovery,” the economist said.
“We expect [the peso] to remain supported to close out the year and the change in net exports to be the lone bright spot for the 3Q (third quarter) GDP release later in the week,” he added.
Rizal Commercial Banking Corporation (RCBC) chief economist Michael Ricafort remarked that the narrower deficit “partly supported the stronger peso exchange rate [versus] the US dollar, as the slowdown in net imports resulted in less demand for the US dollar to pay for imports.”
The “[r]educed trade deficit fundamentally translated to $1.7 billion less demand for US dollars to pay for imports, thereby partly supported the peso’s appreciating trend [versus] the US dollar in recent months, especially since the pandemic reduced the country’s net imports in view of reduced economic activities,” he said..
The peso currently stands at P48.30 against the dollar, compared with P50.635 at the end of last year, according to Ricafort.