Easing imports, exports temper foreign trade growth in May

MANILA, Philippines — Foreign trade posted a double-digit expansion in May, albeit slower than the previous month, as both exports and imports record softer growth.

External trade continued its ascent for the fourth straight month in May, growing 39.9% year-on-year to $14.54 billion, the Philippine Statistics Authority reported Friday morning. But the expansion eased from the record 114.5% annual growth in April.

Figures showed exports inched up to an annualized rate of 29.8% to $5.89 billion in May, slower than 74.1% growth in the preceding month, with electronics leading the pack of gainers after posting a 25.4% year-on-year sales growth. Nicholas Mapa, senior economist at ING Bank in Manila, believes exports could have clocked a faster growth if not for lingering logistics woes amid prolonged pandemic restrictions.

“Exports may have been hampered by the lack of shipment options as local exporting firms have complained about the difficulty of fulfilling orders due to bottlenecks in the shipping industry,” Mapa said in a commentary.

Imports, meanwhile, expanded 47.7% on-year to $8.6 billion, easing from a triple-digit expansion registered in the previous month, on heightened purchases of electronic products, mineral fuels and transport equipment.

For Mapa, both imports and exports figures were still distorted by “base effects” and they paint an unconvincing case for recovery. But Sanjay Mathur, Southeast Asia chief economist for ANZ Bank, said the country’s external trade position should improve in the coming months, despite coming from a low base, as the economy further reopens.

“As for trade, base effects are obviously flattering the numbers. There is an improvement in level terms which should become more solid. However, imports are too high at this stage of the business cycle as is the trade deficit,” Mathur said in an e-mail exchange.

As growth in imports bill outstrips the expansion in export receipts, PSA data showed the country’s trade deficit widened 109.7% on-year to $2.76 billion in May. On Friday, the Philippine peso breached the P50-level against the greenback, as easing lockdowns give importers impetus to ship in more goods, thereby boosting local demand for dollars.