Philippine trade gap widens by 98.5% in June; total trade up 26.8% —PSA

The Philippines’ balance of trade in goods saw an almost 100% deficit in June as growth in imports continues to surpass exports, a sign of recovering international trade from the COVID-19 pandemic, data released by the Philippine Statistics Authority (PSA) showed Friday.

PSA data showed the country’s trade gap stood at $2.83 billion, up 98.5% from $1.42 billion in the same month last year.

Balance of trade in goods is the difference between the value of export and import. A deficit indicates that the value of a country’s imports exceeded export receipts, while a surplus indicates more export shipments than imports.

Total external trade, the summation of imports and exports, amounted to $15.84 billion, up 26.8% from $12.5 billion in June 2020.

Imports accounted for 58.9% of the country’s external trade while the rest or 41.1% were exported goods.

Exports

The country’s export sales in June rose 17.6% to $6.51 billion from $5.53 billion year-on-year.

Of the top 10 major commodity groups in terms of the value of exports, nine recorded annual increases led by cathodes and sections of cathodes of refined copper at 161.1%.

This was followed by the ignition wiring set and other wiring sets used in vehicles, aircraft and ships at 53.4%, and other manufactured goods at 40.5%.

By major trading partner, exports to the United States comprised the highest export value amounting to $1.09 billion or a share of 16.8% to the total exports during the month.

Completing the top five major export trading partners were People’s Republic of China with $1.06 billion or 16.2% share, Japan with a share of $966.51 million or 14.9%, Hong Kong with $907.40 million or 13.9%, and Singapore with $320.83 million or 4.9% share.

Imports

Meanwhile, the country’s total imported goods in June amounted to $9.33 billion, up 34.2% from $6.95 billion a year earlier.

“The annual increment of imported goods in June 2021 was due to the increase in nine of the top 10 major commodity groups which was led by mineral fuels, lubricants and related materials with 131.8% increase. This was followed by transport equipment (129.5%); and iron and steel (120.4%),” the PSA said.

The People’s Republic of China was the country’s biggest supplier of imported goods valued at $2.25 billion or 24.1% of the total imports in June.

Japan is the second biggest source of the Philippines’ imports with a total value of $872.79 million or 9.4%, followed by Republic of Korea with $681.89 million or 7.3% share to the total, USA with $619.01 million or 6.6% share, and Indonesia with $608.97 million or 6.5%.

“Offsetting risk factors for both imports and exports include the relatively higher new COVID-19 local cases amid new coronavirus variants/strains that are more contagious (especially the Delta variant), and any delays in the arrival and rollout of COVID-19 vaccines in the country amid tight global vaccine supply, all of which could lead to some risk of lockdowns and other restrictions in the coming months, thereby could potentially slow down/drag global trade, as well as Philippine exports and imports,” Rizal Commercial Banking Corp. chief economist Michael Ricafort said in an emailed commentary.

The reimposition of enhanced community quarantine (ECQ) in the National Capital Region (NCR) is expected to reduce business or economic activities, “in terms of lower production, sales, income, employment, and livelihood,” according to Ricafort.

This could result in reduction in importation requirements and also could drag on some export-related activities, as seen in the previous ECQ from March 29 to April 11, he said.

The economist said that after the ECQ, any additional measures to further re-open the economy from lockdowns would again lead to some pick up in economic activities, including manufacturing that could also fundamentally lead to some pick up in both exports and imports.  —KBK, GMA News