The Philippines’ merchandise trade amounted to US$15.04 billion in November 2018, up 4.1% from $14.45 billion year-on-year, as continuous albeit slower growth in imports offsets the decline in exports, according to the Philippine Statistics Authority (PSA).
Imports rose to $9.47 billion in November 2018, or 6.8% higher than the $8.86 billion in November 2017. Imports have been continuously recording increases since the start of 2018, but the November growth was the slowest pace since the 2.7% expansion last March.
Exports decreased 0.3% to $5.57 billion in November 2018 from $5.58 billion year-on-year. This was after two months in a row of increases following five months of decline in 2018.
The country’s balance of trade in goods continued to increase to a $3.90 billion deficit in November 2018 from a $3.28 billion deficit in November 2017. The latest trade gap was narrower than the record-high $4.08 billion gap in October 2018.
“A widening current account balance due to rising capital goods imports and anemic exports growth is a cause for concern. The widening gap emphasizes the need to reform legislation to allow foreign investments in firms catering to the domestic market, in addition to expanding their exporting activities,” Socioeconomic Planning secretary Ernesto Pernia said in a statement.
He added that a low-hanging fruit is the full implementation of the Ease of Doing Business Act, which calls for the creation of the Expanded Anti-Red Tape Authority and the full operationalization of the National Single Window. Both measures will benefit existing firms, encouraging expansion, as well as attract new firms to do business in the country, he said.
The growth in imports was due to the positive growth manifested by the top 10 major import commodities. These were the following: cereals and cereal preparations (113.5%); mineral fuels, lubricants and related materials (34.1%); iron and steel (24.9%); other food and live animals (19.9%); plastics in primary and non-primary forms (12.5%); industrial machinery and equipment (10.5%); telecommunication equipment and electrical machinery (4.5%); miscellaneous manufactured articles (4.4%); electronic products (3.9%); and transport equipment (0.2%).
Electronic products accounted for the highest total imports in November 2018 with a share of 27% valued at $2.56 billion. This was followed by mineral fuels, lubricants and related materials with value of $1.21 billion, and then by transport equipment with $951.04 million. By major type of goods, imports of raw materials and intermediate goods contributed the largest share of 38.6%, followed by capital goods with 31.9% and consumer goods with 16.3%.
The decline in exports, meanwhile, was due to decreases in export sales of four of the top 10 commodities, namely, chemicals (-16.9%); ignition wiring set and other wiring sets used in vehicles, aircrafts and ships (-14.9%); electronic products (-1.6%); and coconut oil (-1.3%).
Electronic products continued to be the country’s top export with total earnings of $3.16 billion, followed by other manufactured goods earning $310.67 million, and machinery and transport equipment with revenue of $276.94 million.
For November 2018, China remained the country’s top import source, followed by South Korea and Japan. The United States, meanwhile, was the top export destination, followed by Japan and Hong Kong.
For 2019, “moderation in global growth appears inevitable,” Pernia said.
“Given a less encouraging global economic outlook, the country needs to ramp up the implementation of strategies outlined in the Philippine Export Development Plan 2018-2022,” Pernia noted.
He added that supporting micro, small, and medium enterprises (MSMEs) is necessary to increase their participation in global value chains.
“Simplifying loan processes, provision of financial literacy trainings, and facilitation of linkages between MSMEs and large corporations are some ways to spur the internationalization of MSMEs,” Pernia said.