Philippine merchandise exports grew 1.5% while imports declined 10.4% in June, resulting in a 5.8% dip in the country’s trade in goods to $14.49 billion from $15.39 billion.
Data from the Philippine Statistics Authority showed imports dropping to $8.48 billion in June 2019 from $9.47 billion in June 2018 due to decreases in nine of the top 10 major import commodities, namely, iron and steel (-40.3%); cereals and cereal preparations (-29.4%); industrial machinery and equipment (-20.7%); plastic in primary and non-primary forms (-16.4%); transport equipment (-12.6%); telecommunication equipment and electrical machinery (-12.2%); mineral fuels, lubricants and related materials (-7.0%); other food and live animals (-6.7%); and miscellaneous manufactured articles (-0.1%). This is the third month in a row of a drop in imports.
Exports, on the other hand, rose for a third month in June 2019 year-on-year, earning $6.01 billion. This is 1.5% higher than the $5.92 billion earned in June 2018, the growth due to increases in the export sales of seven of the top 10 major export commodities, namely, cathodes and section of cathodes, of refined copper (41.7%); fresh bananas (24.4%); ignition wiring set and other wiring sets used in vehicles, aircraft and ships (17.6%); gold (10.1%); electronic products (4.3%); machinery and transport equipment (3.0%); and other mineral products (1.1%).
The country’s balance of trade in goods, meanwhile, narrowed for the third straight month to a $2.47 billion deficit in June 2019 from a $3.55 billion deficit in June 2018.
By major trading partners, China was the country’s biggest supplier of imported goods with 22.8% share to total imports, or $1.93 billion, in June 2019. Other major import trading partners were Japan, $822.60 million; South Korea, $678.10 million; United States, $602.98 million; and Thailand, $521.37 million.
In terms of exports, the US posted the highest value at $974.36 million, or a share of 16.2%; followed by Japan, $874.18 million; China, $824.85 million; Hong Kong, $812.53 million; and Singapore, $336.24 million.
Socioeconomic Planning secretary Ernesto M. Pernia attributed the external trade slowdown in part to the ongoing trade disputes, Brexit-related uncertainties, and rising geopolitical tensions.
“Despite the challenging external environment, the Philippines has shown resilience in its trade performance. The Philippines is among the countries in Asia with positive export growth,” Pernia said in a statement.
In exports earnings, only Vietnam and the Philippines registered gains among selected Asian economies that included China, India, Indonesia, Malaysia, Singapore, and Thailand.
“The government must continue promoting the competitiveness of the Philippine exports by implementing policies and laws such as the Philippine Innovation Act. This will encourage innovation that will reduce the cost of production and elevate the quality of Philippine products to meet international standards,” the Cabinet official added.
“However, considering the less optimistic global trade prospects, it is necessary to diversify markets and boost domestic demand to compensate for the weakness of external trade,” Pernia said.
The Cabinet official likewise reiterated the National Economic and Development Authority’s (NEDA) call to diversify products and markets by establishing new trade relations and improving existing ones with strategic partners.
“In light of the current trade spat between Korea and Japan, we need to complete the negotiations for the free trade agreement with South Korea and review the decade-old Philippines-Japan Economic Partnership Agreement to further expand the country’s exports in both markets,” said Pernia, who is also NEDA director general.
“Importantly, the government has been fast-tracking the implementation of infrastructure projects under the Build, Build, Build program to enhance trade facilitation and provide logistical support to manufacturers and exporters,” he added.
However, only 11 (of 38 NEDA Board-approved project proposals) out of the 75 infrastructure flagship projects are now in the construction phase. Further speeding up the rollout of approved projects and processing of those on the flagship list are called for to boost government spending to provide needed stimulus to economic growth.
Pernia also urged the government to be ready with countermeasures against disruptions to construction activities that may occur from unfavorable weather conditions.