January imports plunge to lowest level in 7 years

The country recorded a sharply higher trade surplus in January than it did a year ago, but imports for the month were at their lowest level in seven years, giving rise to fears a recovery in exports is still some way off.

The National Statistics Office (NSO) reported yesterday that imports plunged by 18.7 percent to $2.01 billion in January from $2.472 billion in the same period last year.

The 18.7 percent drop in January was the sharpest drop since a 23.6 percent fall in November last year, while the import figure for the period was the lowest since $1.62 billion in February 1995.

Analysts said the fall in imports was of concern because most of the country’s exported manufactured goods rely heavily on imported components and materials.

"This shows that the recovery isn’t a complete one yet, it’s not that generally strong," IDEAglobal.com economist Julian Wee said.

Wee said the weak imports in the first month of the year may translate into a fall in exports in February, probably deeper than the 8.9 percent decline in January.

The NSO said the country’s trade surplus in January rose by 48.9 percent from a year earlier to hit $621 million due to the import plunge.

Electronics, the largest import category, plunged by 19.3 percent to $370.48 million in January. Imported electronics components are used in the manufacture of semiconductors and other electronics products.

"Imports were far weaker than expected, sending another signal of weakening domestic demand," said Gene Frieda, an analyst at 4CASt.

Another analyst from a foreign investment house said that the sharp drop in imports in January showed the Philippines could not rely on export-led growth to sustain the economy this year.

"We don’t really expect exports to be the main driver this year for Asian economies," she said, referring to hopes a US economic recovery in 2002 would lift the Philippines.

Wee said it might take a few months before growth in the US could affect the Philippines, although it should translate to higher exports eventually.

The government expects exports to grow by one to 1.5 percent this year, following a 15.6 percent fall in 2001 amid the global economic slowdown, exacerbated by fallout from the Sept. 11 terrorist attacks in the US.

Other top imports for January were: telecommunication equipment and electrical machinery , down 11.3 percent to $223.94 million; mineral fuels, lubricants and related materials, down 32.1 percent to $205.56 million; office and EDP machines, down 2.8 percent to $147.11 million; and industrial machinery and equipment, down 39.6 percent to $97.34 million.