Philippine merchandise trade grew 17.5% in July 2018, reaching US$15.25 billion from $12.97 billion in the same month last year, backed by double-digit growth in imports and a slight increase in exports.
Data from the Philippine Statistics Authority showed that imports went up 31.6% to $9.4 billion in July 2018 from $7.14 billion in the same month of the previous year. Imports have continuously posted increases since the start of the year.
Exports, after five consecutive months of decline, posted a 0.3% increase to $5.85 billion in July 2018 from $5.83 billion in July 2017.
This widened the country’s balance of trade in goods to a $3.55 billion deficit in July 2018, higher than the $1.31 billion deficit in July 2017.
The increase in imports was due to the positive growth of nine out of the top 10 major import commodities for July 2018. These were the following: iron and steel (135.5%); transport equipment (61.1%); miscellaneous manufactured articles (45.4%); electronic products (43.2%); telecommunication equipment and electrical machinery (37.9%); mineral fuels, lubricants and related materials (35.8%); cereals and cereal preparations (35.7%); plastics in primary and non-primary forms (29.5%); and industrial machinery and equipment (17.9%).
For exports, the slight recovery was attributed to increases posted by six out of the top 10 commodities for the month, led by miscellaneous manufactured articles (80.2%), and followed by bananas (fresh) (60.3%); electronic equipment and parts (43.3%); other mineral products (33.6%); metal components (8.7%); and electronic products (5.2%).
A big chunk of imports still comes from China while top export destinations were North America, Japan, and Hong Kong.
Trade slowdown
The National Economic and Development Authority (NEDA), however, noted that according to the World Trade Outlook Indicator, there will still be continued slowdown in trade in the third quarter. The slowdown in activity is attributed to rising trade barriers, moderating growth in China, higher energy prices, and elevated policy uncertainty.
Moreover, the trade war between the US and China has resulted in a growing coverage of tariff levies throughout the year, with both countries already imposing additional 25% tariff on US$50 billion worth of goods each.
“Trade war fears have weighed on business sentiment, and we now see softer global activity. With a resolution unlikely in the short term, the dispute is expected to dampen growth in both economies and drag down growth in the wider global economy,” Socioeconomic Planning secretary Ernesto Pernia said in a statement.
To boost exports, Pernia said there is a need to promote forward and backward linkages. This is through projects such as the Agribusiness Support for Promotion and Investment in Regional Expositions or ASPIRE, which integrates marketing development support services to farmers, fisherfolk, and MSMEs, and linking exporters to sources of export financing.
He added that the high cost of domestic and international shipping and cargo handling also needs to be addressed.
“Addressing costs of trade will ensure that imported goods, especially capital and intermediate products, are less expensive and are efficiently utilized in the country’s Build, Build, Build program,” he said.
Pernia further noted that the deterioration in the global economic environment underlines the importance of ensuring domestic economic fundamentals remain strong.
