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The Philippines’ total merchandise trade in June 2020 declined 19.9% against the same period last year, but improved on the previous month’s 35.3% contraction, signaling the resumption of economic activities.

Trade in goods declined 19.9% to US$11.97 billion in June from $14.936 billion year-over-year. The decline was faster than the rate of decrease in June 2019 of 2.9%, but was slower than May 2020’s annual drop of 35.3%, the Philippine Statistics Authority (PSA) said.

“This slower decline in the country’s trade performance signals the resumption of economic activities,” acting Socioeconomic Planning Secretary Karl Kendrick Chua said in a statement.

But Chua, also head of the National Economic and Development Authority, said the recent reversion of Metro Manila, Bulacan, Cavite, Laguna, and Rizal to a modified enhanced community quarantine (MECQ) “may, for a limited period, affect businesses and the workforce as certain sectors need to scale back or temporarily suspend operations.”

Of the total external trade in June this year, 55.4% were imported goods and the rest were exported goods.

The country’s balance of trade for June 2020 was negative $1.30 billion, which represents a trade deficit with an annual decline of 50.6%, slower than May 2020’s rate of 63.8%.

Imports plunged 24.5% to $6.63 billion in June 2020 from $8.786 billion in June 2019 due to decreases in seven out of the top 10 major import commodities. These were led by transport equipment (-70.5%); mineral fuels, lubricants and related materials (-56.9%); and iron and steel (-40.9%).

Exports also dropped 13.3% to $5.33 billion from $6.15 billion in June 2019, recording the fourth consecutive month of negative growth. Of the top 10 major commodity groups in terms of exported value, eight had annual decline, led by metal components (-30.5%); coconut oil (-29.7%); and machinery and transport equipment (-26.3%).

By commodity group, electronic products remained as the country’s top import, accounting for 30.8% of the total or $2.04 billion. It also remained as the top export commodity with 59.6% share or $3.18 billion of the total.

By major type of goods, exports of manufactured goods accounted for the highest share of $4.408 billion or 82.7% of the total. For imports, raw materials and intermediate goods accounted for the largest share of $2.85 billion or 42.9% of the total.

PSA noted that the import of personal protective equipment and medical supplies in June 2020 amounted to $31.16 million, an annual increase of 124.1%.

By trading partner, China accounted for the highest value of exports, followed by Japan, the United States, Hong Kong, and Singapore.

China remained the Philippines’ biggest supplier of imported goods, while the other major import trading partners were Japan, US, South Korea, and Singapore.

Chua said the reversion to MECQ “will allow the government to reassess approaches, procedures, and response protocols and capacities that may need to be improved to better contain the spread of the virus while ensuring that the gains from reopening the economy are not fully reversed.”

The Philippines reverted to a two-week MECQ from the more relaxed general community quarantine last August 4 following an appeal from the medical community for tighter controls amid a surge in COVID-19 cases.

Chua said government efforts will continue to focus on realizing structural reforms and supporting needed legislations to ensure that businesses will be supported as the economy recovers.

“NEDA has been working closely with relevant departments and both houses of Congress to prioritize reforms that will help the economy recover, promote competitive playing field, and allow firms to maximize productive capacity,” he added.

On a global perspective, trade flows to most of the country’s major trading partners remained in negative territory, but contractions were at a slower pace compared to the previous months.

Exports of goods to the European Union improved significantly by 25 percentage points, while the progress in East Asia and Association of South East Asian Nations continued as contraction narrowed by almost 18 percentage points from the previous period.

“As ASEAN countries account for more than 15% of the country’s total exports, the contraction in these countries’ GDP would need to be closely watched as further drop in their economies could affect trade flows and may reverse the improvements in trade observed during the period,” Chua said.

He noted that the decline in merchandise exports can be partly due to demand factors, particularly how the Philippines’ trading partners are faring economically.

“With restricted mobility and economic activity due to the global pandemic, GDP growth is negatively affected. Our major trading partners’ GDP has declined in the second quarter of the year, resulting in a reduced appetite for imported goods. This has led to lower demand for Philippine exports,” the Cabinet official said.

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