The country’s trade deficit expanded to its largest level in a year in January as imports outpaced exports, the Philippine Statistics Authority (PSA) reported on Friday.
Data from the statistics agency showed that the value of inbound shipments fell by 14.9 percent year-on-year to $7.91 billion and outbound ones declined by 5.2 percent to $5.48 billion.
This resulted in the trade balance posting a gap of $2.42 billion in the first month, smaller than $3.50 billion a year ago, but bigger than $2.14 billion in December.
In a statement, the PSA said the “annual decrement of imported goods in January 2021 was due to the decrease in nine of the top 10 major import commodities.”
Of these, the reductions were fastest in industrial machinery and equipment (-36.9 percent); transport equipment (-36.8 percent); and mineral fuels, lubricants and related materials (-33.6 percent).
Most of the imported goods were electronic products with an import value of $2.34 billion, or a 29.6-percent share to total imports in January. Mineral fuels, lubricants and related materials were valued at $681.74 million (8.6 percent); and transport equipment, $565.08 million (7.1 percent).
On exports, four of the major commodity groups posted annual slides: fresh bananas (-46.9 percent); other manufactured goods (-12.8 percent); machinery and transport equipment (-11.9 percent); and coconut oil (-11.7 percent).
“ commodity group, electronic products continued to be the country’s top export, with total earnings of $3.24 billion,” the PSA said, adding that these accounted for 59.1 percent of the total in the month.
Manufactured goods came second with $292.68 million (5.3 percent); and ignition wiring set and other wiring sets used in vehicles, aircrafts and ships came third with $224.65 million (4.1 percent).
In a comment, ING Bank Manila senior economist Nicholas Antonio Mapa attributed the latest exports performance to damages wreaked by recent storms, which hurt agricultural output.
He said “the sustained drop in imports highlights the negative impact of the recession, with a 14.8-percent drop in capital goods mirroring falling capital formation, while the 12.9-percent contraction in consumer goods reflects fast-fading household consumption.”
The imports data “suggests that growth pains for the Philippines will be around for some time, with the sustained drop in capital goods and raw materials suggesting that potential output is falling, as well,” the economist added.
According to Mapa, the contraction in heavy machinery for construction and commercial aircraft would dent capital formation and limit any economic recovery effort.
The Philippines recorded a $21.80-billion trade shortfall in full-2020, 46.4 percent smaller than 2019’s $40.66 billion. Imports slid by 23.2 percent to $85.68 billion, while exports slipped by 9.9 percent to $63.87 billion.
For this year, the Bangko Sentral ng Pilipinas sees imports and exports to climb by 8 percent and 5 percent, respectively.