Import rise signals hiked economic activity

The country’s imports improved in February after seven consecutive months of continued declines, prompting analysts to say that economic activity is definitely picking up.

The National Statistics Office (NSO) reported yesterday that imports for February edged up by 0.6 percent to $2.207 billion, from $2.193 billion in the same period last year. The figure also managed to exceed a seven-year low in imports posted in January at $2.01 billion.

Imports of electronics and components, which made up 24 percent of the total import bill, expanded by a notable 41.6 percent to $528.81 million, from $373.58 million a year ago.

Analysts said the country’s imports of electronic parts are used to feed the export sector, and any increase usually leads to more exports within a few months.

"I think the trend remains upward for imports in the coming months," said David Cohen of MMS/S&P in Singapore. "This is very encouraging… economic activity is picking up."

The higher imports, however, dragged February’s trade surplus down to $421 million, from $612 million in February last year.

Exports for February were earlier announced by the government statistics office at $2.628 billion.

The government expects exports to expand by one to 1.5 percent this year.

Among the country’s top imports, payments for office and EDP machines amounting to $202.99 million ranked second with a 9.2-percent share and a 19.9-percent increase from last year’s level.

Mineral fuels, lubricants and related materials, the third top import, reported purchases worth $184.87 million, or a 35-percent drop from $284.58 million a year earlier.

Telecommunication equipment and electrical machinery, accounting for 8.3 percent of total bill, ranked fourth as payments reached $183.69 million, down by 26.8 percent from $251.05 million a year ago.

Other top imports for February were: transport equipment, $106.16 million; other materials imported on consignment basis, $100.59 million; machinery and equipment, $89.37 million; cereals and cereal preparations, $72.57 million; and iron and steel, $62.01 million.

Andrew Fung, head of research for Rabobank in Singapore, said the slide in imports had most probably bottomed out, although he said an export recovery was not likely until the third quarter.

"I would read it quite favorably, it looks it is bottoming out (the slide in imports) which is probably consistent with the country’s relatively robust consumption data," he said, adding that "I see things starting to pick up as intermediate goods (imports) start to pick up along with a rise in exports."

But Jose Vistan, an economist at Manila’s AB Capital, said rising oil prices posed a risk. "Higher oil prices would affect the sustainability of the recovery," he said. "It could also affect the trade balance because we largely import crude. If we’re going to have higher imports because of the increasing need for imported raw materials, that’s good for expansion purposes."