The country’s trade deficit worsened in June to $5.843 billion. But Socioeconomic Planning Secretary Arsenio Balisacan expects the deficit to continue growing when the big- ticket infrastructure projects go into full-swing this year.
The country’s trade deficit worsened in June to $5.843 billion with imports growing by 26 percent annually to $12.487 versus exports of $6.644 billion, which grew only by 1 percent, sharply slower than the revised 6.4 percent in May and 18.9 percent in June last year.
The Philippine Statistics Authority said the imports grew slower than the revised 30.2 percent in May and 42.4 percent in June 2021 Business World reported.
The yearly increase in imports eased to its lowest since the 23.4 percent jump in March. June marked the 17th straight month of imports growth.
Exports
Exports last June inched slow by 1 percent to $6.644 billion, sharply slower than the revised 6.4 percent in May and 18.9 percent in June last year. This was the slowest annual growth since the 1.4% contraction in February 2021.
This brought the balance of trade in goods — the difference between exports and imports — to a record deficit of $5.843 billion in June.
It was wider than the $3.331-billion gap in the same month last year and the revised $5.556-billion deficit in May.
Meanwhile, total trade — the sum of exports and imports — jumped by 16.1 percent to $19.131 billion. The growth was slower than the revised 20.8 percent in May and 32 percent in June a year ago.
In the first semester of 2022, imports rose by 26.7 percent to $68.320 billion, above the government’s 18 percent target for this year.
Exports for the first half likewise went up by 7.1 percent to $38.527 billion, in line with the 7 percent full-year growth target set by the Development Budget Coordination Committee.
Year to date, the trade deficit ballooned to a $29.793-billion from the $17.953-billion gap a year ago.
Widen some more
Socioeconomic Planning Secretary Arsenio M. Balisacan said the country’s trade deficit is expected to widen this year.
“We are ramping up and continuing the rapid growth in our construction spending for capital formation,” Balisacan said at a press conference on Tuesday.
UnionBank of the Philippines, Inc. Chief Economist Ruben Carlo O. Asuncion said the trade activity has slowed as it returns to its pre-pandemic level.
“The continued widening of the trade deficit is still mainly due to the bloated imports made up largely of higher oil costs and higher priced imported inputs,” he said.
“Nevertheless, with global oil prices on the decline due mainly to higher supplies, we will see the trade deficit ease in the coming months and therefore easing off pressure on the local currency.”
Security Bank Corp. Chief Economist Robert Dan J. Roces said that global supply chain issues affecting electronic components drove exports lower in June.
“This was exacerbated by the extraordinary level of electronics demand post-pandemic, and as such there is a need to make the electronics manufacturing process resilient to supply chain disruptions in the future,” he said adding that for now, the strain and challenge that global supply chain issues are creating for the electronics manufacturing industry may be prolonged.”
Electronic products, with a 53 percent share in total exports and 67.5 percent of manufactured goods, fell by 5.2 percent to $3.524 billion.
Semiconductors, which accounted for more than three-fourths of electronic products and 40.4 percent of total exports, dipped by 2.5 percent to $2.685 billion.
“There will be no trade deficit for the electronics industry,” Semiconductor and Electronics Industries in the Philippines Foundation, Inc. President Danilo C. Lachica said in a separate e-mail.
“In fact, electronics exports are projected to grow by 10 percent in 2022,” he said.
By major type of goods, manufactured goods had the biggest share of the total exports in June by 78.6 percent, amounting to $5.224 billion. However, this was down by 2.4 percent year on year from $5.35 billion in June last year.
Meanwhile, imports of raw materials and intermediate goods grew by 14 percent on an annual basis to $4.631 billion.
Imports of capital and consumer goods were valued at $3.108 billion (up by 2.9 percent) and $2.042 billion (up 30.2 percent), respectively.
Mineral fuels, lubricant, and related materials more than doubled to $2.641 billion from $1.173 billion a year ago.
Export markets
The United States was the top export destination in June with export receipts amounting to $1.047 billion, accounting for 15.8 percent of the total.
Exports to Japan hit $1.027 billion (15.5 percent share), while exports to China reached $868.676 million (13.1 percent).
Meanwhile, China remained the main source of inbound shipment of goods, amounting to $2.547 billion or 20.4 percent of the total. This was followed by Indonesia with $1.319 billion (10.6 percent share) and Japan with $1.178 billion (9.4 percent share).
“We still expect double-digit import growth in [the second half of 2022], while exports could weaken further as global growth cools down amid high inflation and rising rates environment,” Roces said.
The PSA noted that import figures for June to December 2021 (except for November) and January to May 2022 were revised due to exclusion of duplicate transactions identified by the Bureau of Customs.
It said that these transactions came from the withdrawal of manufactured goods from the freeport zone area.
Balisacan said the country’s deficits will still grow especially when big-ticket infrastructure projects are already in full swing, according to the National Economic and Development Authority (Neda).
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