Trade deficit deteriorates to $1.502B in first semester as imports surge

The country’s trade deficit ballooned to $1.502 billion in the first six months of the year compared with the $185 million shortfall in the same period last year as demand for imported vital industrial inputs like equipment and machinery rose significantly during the period, the National Statistics Office (NSO) reported yesterday.

For the six-month period, imports rose by 9.9 percent to $18.57 billion from $16.89 billion a year ago while exports grew by only 2.1 percent to $17.07 billion from $16.71 billion.

Trade and Industry Secretary Manuel Roxas II said the first half trade figures indicate an improvement in economic activity as reflected in the 14.2 percent increase in demand for imported capital goods.

"The increase indicates that our industries have continuously been investing in equipment and machinery during the first semester of this year," Roxas said.

"Despite the uncertainties that characterized the first semester, particularly the war in the Middle East and the SARS epidemic, business continued to take a long-term view on the prospects of the Philippine economy and did not totally hold back," he added.

The DTI chief also pointed out that half of the imported capital goods during the six-month period came in the form of telecommunications equipment and electrical machinery worth $4.035 billion.

"The continued investment, particularly in telecommunication facilities is consistent with our thrust to promote the development of the country as a regional hub for information technology-based services such as call centers and business process outsourcing," Roxas said.

Such investment, Roxas said, "explains why, despite the seemingly negative atmosphere, our economy as a whole continues to remain afloat."

For June alone, a trade surplus of $139 million was recorded which was a reversal of the $503 million deficit recorded in May.

The government statistics office said it was the first monthly trade surplus for the Philippines this year.

Imports in June amounted to $2.922 billion, down 3.3 percent from $3.022 billion a year ago.

Exports in June–which were reported earlier this month– rose to $3.06 billion , beating economists’ expectations and raising hopes for faster economic growth in the second half.

Electronics, assembled largely from imported parts, account for about two-thirds of total exports.

Japan accounted for 21.6 percent of total imports in June at $629.73 million, followed by the US at $543 million and South Korea at $215.7 million.

Singapore, China, Hong Kong, Taiwan and Saudi Arabia were other major markets. –With Marianne V. Go