Foreign trade sustains growth in June, but lockdowns could undo gains

MANILA, Philippines – Foreign trade parked itself firmly in the green in June as both imports and exports sustained their growth, but hard lockdowns in August could undo gains.

External trade rose 26.8% year-on-year to $15.8 billion in June, the Philippine Statistics Authority reported Friday morning. This was slower compared with 44.8% annual expansion recorded in May, but it was a reversal from 16.4% contraction a year ago.

Broken down, exports grew at an annualized rate of 17.6% to $6.51 billion, marking their fourth consecutive month of growth with electronic products continuing to be the country’s top export commodity. Imports, on the other hand, grew for the fifth straight month, expanding 34.2% year-on-year to $9.33 billion.

As a result, the country’s trade deficit, which happens when imports outstrip exports, narrowed to $2.8 billion in June compared with $3.2 billion gap in May. The June deficit was the smallest amount in three months.

Sought for comment, Nicholas Antonio Mapa, senior economist for ING Bank in Manila, said the growth of imports and exports was “faster-than-expected,” but some gains could disappear as harsh restrictions returned this month.

Starting August 6, Metro Manila will return to enhanced community quarantine (ECQ) — the most stringent lockdown — for two weeks to curb the spread of highly contagious Delta variant.

“The reimposition of lockdowns across the country may force recent trade trends to reverse but we doubt another round of import decline in 2021 will be enough to duplicate the PHP appreciation trend we saw last year,” Mapa said in a commentary.