The country's trade surplus narrowed sharply to $65 million in January, from $182 million in the same period last year as imports rebounded strongly, signaling a strengthening of the economy.
Imports expanded by 10.6 percent to $2.651 billion in January from $2.398 billion last year, while exports rose by a slower 5.3 percent to $2.71 billion from $2.581 billion a year ago.
After several years of near stagnation in imports, January's increase indicates a rise in consumer demand and a gearing up of production by manufacturers who depend on imported parts for many of their export products, analysts said. Last year, imports rose a mere 3.6 percent.
"Double-digit growth in January, which is usually a slow month, is a clear sign that the momentum is here for a stable economic recovery," Abacus Securities Corp. economist Emilio Neri said.
But the strong January import growth, according to most analysts, is not expected to be enough to restore sagging confidence in the local economy, despite recent stable inflation and an improving government budget deficit, because of perception of ineptitude and cronyism in the administration of President Estrada.
Edison Yap, senior investment analyst at Equitable-PCIBank Trust, said foreign investors will continue to avoid the Philippines until Mr. Estrada's administration proves it is rid of corruption.
Among the country's major imports, electronics and components went up by 9.5 percent to $708.53 million from $647 million last year.
Imports of mineral fuels, lubricants and related materials rose sharply by 85.5 percent to $250.23 million from $134.90 million last year.
Purchases of telecommunication equipment and electrical machinery worth $210 million were 13.4 percent higher than last year's $185.27 million while that of industrial machinery and equipment fell by five percent to $167.27 million from $176.04 million.
Other top imports were other electrical and electronic machinery and equipment, $151.54 million; transport equipment, $138.72 million; office and EDP machines, $108.95 million; textile, yarn and fabrics, $93.24 million; iron and steel, $67.24 million; and organic and inorganic chemicals, $48.25 million.
Luz Lorenzo, research head of ATR-Kim Eng Securities Inc. believes the strong January import growth sets the stage for a broad-based economic expansion this year.
"Imports reflect expectations of rising consumer demand, something that has been sorely lacking in our progress toward economic recovery. --