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Trade gap shrinks to $3.5B in September

The Philippine trade deficit shrank to $3.51 billion in September. — PHILIPPINE STAR/EDD GUMBAN

THE COUNTRY’S trade-in-goods deficit in September narrowed to its lowest level in nearly a year after a decline in exports and imports, preliminary data from the Philippine Statistics Authority showed.

The trade gap shrank by 27% year on year to $3.51 billion in September from the $4.83-billion deficit recorded in the same month last year. It was also smaller than the revised $4.13-billion deficit in August.

This was the slimmest trade-in-goods gap in 11 months or since the $3.31-billion gap in October last year.

The country’s balance of trade in goods — the difference between exports and imports — has been in the red for over eight years or since the $64.95-million surplus in May 2015.

Merchandise exports contracted by 6.3% to $6.73 billion in September, a reversal from the 7.2% growth in the same month last year and the revised 4.2% in August.

Despite the decline, September’s export value was at the highest level in 10 months or since $7.1 billion in November 2022.

Meanwhile, imports fell by 14.7% annually to $10.24 billion in September, reversing the 14.4% growth in the same month a year ago and worsening from the 13% contraction in August.

September marked the eighth straight month of a decline in imports.

China Banking Corp. Chief Economist Domini S. Velasquez said in a Viber message that “the back-and-forth swings between positive and negative growth for exports underscore the uncertain path of recovery, given current macroeconomic conditions.”

In the first nine months of the year, exports dropped by an annual 6.6% to $54.54 billion while imports also declined by 10.2% to $94.36 billion.

This is still well below the Development Budget Coordination Committee’s revised growth targets of 1% and 2% for exports and imports, respectively, for this year.

Year to date, the trade gap narrowed by 14.7% to $39.82 billion from the $46.69-billion gap a year ago.

ELECTRONICS EXPORTS DROPPEDManufactured goods, which contributed the biggest share to the country’s total export at 82.7%, contracted by an annual 8.2% to $5.56 billion in September.

Electronic products, which account for more than half of exports, dropped by 9.4% to $4.09 billion.

“Exports of electronic products declined after four successive months of growth, this was likely on the back of the persistent slump in manufacturing globally and economic slowdowns in major trading partners,” Ms. Velasquez said.

Semiconductors, which accounted for 81% of electronic products, fell by 7.7% to $3.32 billion in September.

Meanwhile, raw materials and intermediate goods accounted for the biggest share of total imports in September but declined by 17.6% to $3.6 billion.

Imports of capital goods dropped by 11.2% to $2.99 billion while consumer goods dipped by 1.9% to $2.12 billion.

Mineral fuels, lubricants, and related materials also contracted by 27.5% to $1.49 billion.

United States was the top market of Philippine exports in September with $1.06 billion, representing 15.8% of the country’s total exports. The Philippines’ top export trading partners also include China ($1.05 billion), Japan ($898.94 million), Hong Kong ($836.17 million) and South Korea ($306.54 million).

China was the main source of imported goods in September with $2.63 billion, followed by Indonesia ($902.56 million), Thailand ($840.32 million), Japan ($833.15 million) and South Korea ($696.29 million).

Ms. Velasquez said she expects this year’s trade deficit to be narrower than 2022’s gap, providing “some support to the peso.”

“However, the lackluster performance of both exports and imports will take a toll on the country’s economic outlook. Weak imports of capital goods point to a fragile industry performance in the long run,” she said.

For the third quarter, a BusinessWorld poll forecast a median gross domestic product (GDP) growth estimate of 4.9%, faster than 4.3% in August but slower than 7.7% in the same period last year.

This could put the year-to-date average GDP expansion at 5.2%. The government is targeting 6%-7% GDP growth this year. — A.C.Abestano

Neil Banzuelo

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