Foreign trade expands at slower pace in September

MANILA, Philippines — Foreign trade continued its ascent in September, albeit at a slower pace, as demand stood firm against pandemic curbs then. 

What’s new

External trade grew 16.9% year-on-year to $17.35 billion in September, the Philippine Statistics Authority reported Friday. This was slower than the 25.3% annual growth rate in August, and a turnaround from the 4.7% contraction last year. 

Data found exports maintained its footing as it rose 6.3% year-on-year to $6.68 billion in September, hitting its seventh straight month of growth. Imports likewise grew at a slower annualized rate of 24.8% to $10.67 billion in September. 

That said, the country’s trade deficit, which occurs when the imports bill exceeds export sales, yielded $4 billion in September, 13.8% wider than the previous month. However, the trade gap expanded to 61% on an annual basis. 

Why this matters

Recovering trade is a welcome development as the country is eyeing to regain its footing from a pandemic-induced recession. 

By all accounts, the Bangko Sentral ng Pilipinas forecast export of goods to climb 14% this year, while imports are projected to expand 20%. 

Imports on the mend, which comprise 61.5% of the country’s external trade in September, could be a sign of improving consumption conditions. 

What an analyst says

Sought for comment, Jun Neri, chief economist for Bank of the Philippine Islands, said the latest imports bill showed signs of improving demand amid strict quarantine measures back then.

“Exports seems to have slowed noticeably but this could just be a soft patch due to the Delta variant. Imports, on the other hand remained pretty hefty and is indicative of improving demand even as ECQ was still in place in early September,” he said in a Viber message.

“We expect both to remain pretty strong for the balance of the year through early 2022 as the reopening of the economy will likely translate to more mobility, therefore leading to a widening of the trade deficit. The peso should continue to come under pressure as a result,” he added. 

Other figures

• Sales of electronic products, which are the country’s top exports, up 5.4% year-on-year. 

• Fuel shipments, which grew 117.4% year-on-year in September, drove growth in the total imports bill during the month.