Trade gap nears $6B; seen widening further

THE national government expects the country to continue posting trade deficits especially when big-ticket infrastructure projects are already in full swing, according to the National Economic and Development Authority (Neda).

In a briefing on Tuesday, Socioeconomic Planning Secretary Arsenio M. Balisacan said trade deficits are expected to grow since many construction materials are imported from various parts of the world.

The Philippine Statistics Authority (PSA) said the trade deficit that neared the $6-billion mark was the highest in the PSA’s records. The trade deficit surged 75.4 percent in June since the country’s import bill grew 26 percent and export receipts inched by a percent during the period.

“We are also likely to see large importations for construction because we are ramping up and continuing the rapid growth in construction spending. If we do, we would expect that trade deficits [will] continue and [will]increase,” Balisacan said.

However, Balisacan noted that while this is the case, importing commodities that create value for the economy would also boost the country’s export sector. He added that investments in infrastructure would also enhance the competitiveness of the Philippine economy.

Balisacan also noted that while exports posted minimal growth of only 1 percent in June, he is not worried, given that the Philippines has other sources of foreign exchange. This includes Overseas Filipino remittances as well as tourism sector earnings.

“We continue to [receive] robust remittances [and we are] ramping up support for tourism which will be a major driver for foreign exchange earnings. [In terms of]investments, we are counting on the legislative reforms that the previous administration was able to pass and ramp up the groundwork for making those reforms already available for the business community. That should again improve our competitiveness and our export potential,” Balisacan explained.

Based on the PSA data, the country’s trade deficit widened 66 percent in the January to June period while total trade grew 18.8 percent. Total exports rose 7.1 percent and imports grew 26.7 percent in the first semester of 2022.

The data showed the country’s exports that posted triple-digit growth rates in June were Other Coconut Products which grew 243.4 percent; Copper concentrates, 210.4 percent; Mangoes, 170.3 percent; Unmanufactured tobacco, 145.1 percent; Iron and steel, 133.2 percent; and gold, 102.3 percent.

In the first semester, exports that posted the highest growth rates were chromium ore which surged 690.4 percent; Other Coconut Products, 217.9 percent; telecommunication, 180.4 percent; and Coconut oil, 119 percent.

For imports, the goods that posted the highest increases in June were Mineral Fuels, Lubricants and Related Materials at 125.1 percent, followed by fish and fish preparation at 122.8 percent; corn, 110.6 percent; chemical compounds, 80 percent; and office and EDP machines, 75.7 percent.

From January to June this year, goods that posted the highest growth were Office and EDP Machines at 240 percent followed by corn with 199.2 percent; Mineral Fuels, Lubricants and Related Materials, 117.2 percent; Fertilizers, Manufactured, 67.1 percent; and Pulp and Waste Paper, 50.1 percent.

By major trading partner, exports to the United States of America (USA) comprised the highest export value of $1.05 billion or a share in total June exports of 15.8 percent.

Completing the top 5 major export trading partners were Japan, with exports amounting to $1.03 billion or 15.5 percent of the total; the People’s Republic of China, $868.68 million, 13.1 percent; Hong Kong, $826.73 million, 12.4 percent; and Singapore, $482.89 million, 7.3 percent.

The country’s top import source in June was the People’s Republic of China with imported goods valued at $2.55 billion or 20.4 percent of total June 2022 imports.

Completing the top 5 major import trading partners were Indonesia with an import value of $1.32 billion or 10.6 percent of the total; Japan, $1.18 billion, 9.4 percent; Republic of Korea, $1.18 billion, 9.4 percent; and Singapore, $801.27 million, 6.4 percent.