Surging imports bloat trade shortfall further

MANILA, Philippines — The country’s balance of trade in goods further ballooned in March as imports outpaced exports, with the Philippines taking a hit from rising commodity prices in the global market due to continuing global tensions.

Latest data from the Philippine Statistics Authority showed that the country’s trade shortfall surged by 81.4 percent to $5 billion in March from $2.76 billion in the same period last year. The March trade gap was also higher than the $4.17 billion a  month ago.

The country’s imports expanded by 27.7 percent to $12.17 billion in March while exports improved by just six percent to $7.17 billion.

The widening trade deficit continues to be driven by fuel imports, whose prices have been elevated for months now and exacerbated by the Russia-Ukraine war.

ING Bank senior economist Nicholas Mapa said the widening trade gap means pressure on the Philippine peso would persist into the medium term and exert more price pressures for the whole of 2022 and next year.

“It means that pressure on the Philippine peso will only intensify as commodity prices edge higher. All this and more form a true test for our incoming president,” Mapa said.

The country’s fuel import bill is still bloated and such a scenario may continue to persist as global oil prices show no sign of stabilizing as the war drags on. This could contribute to a wider trade deficit moving forward.

The country’s total fuel imports in March more than doubled to $2.59 billion from just $1.04 billion a year ago.

On the domestic front, local pump prices were rolled back this week, but the decrease is still far from the combined price hikes since the start of the year.

Meanwhile, overall external trade in goods in March went up by 18.6 percent to $19.35 billion from $16.31 billion year-on-year. For the three-month period, cumulative total trade reached $52.73 billion, up 21 percent.

In terms of imports, Mapa said key sub-sectors such as consumer imports and capital machinery suggest that economic recovery would be shallow as consumption and investment momentum is not as robust as hoped for.

Apart from fuel, all other top imports of the country increased during the month, led by medicinal and pharmaceutical products. Double-digit gains were also recorded in cereals and cereal preparations, transport equipment, iron and steel, and miscellaneous manufactured articles.

Other increases were noted in electronic products, industrial machinery and equipment, other food and live animals, and telecommunication equipment.

From January to March, total imports increased by 28 percent to $33.31 billion.

China was still the country’s biggest supplier of imported goods, cornering 17.5 percent of the total with $2.13 billion.

On the other hand, outbound shipments inched up by six percent in March, aided by the steady demand for electronics. Exports inched up by 9.8 percent to $19.42 billion for the three-month period.

“Export growth continues but has finally normalized after base effects wane,” Mapa said.

The export growth of 5.9 percent for March is a five-month low. Dollar earnings from electronic products, the country’s top export, improved  by 8.1 percent to $3.96 billion.

Other exports that showed strength during the month include coconut oil, mineral products, and gold.

However, declines were noted in other manufactured goods, cathodes, ignition wiring sets, machinery and transport equipment, chemicals and metal components.

The top 10 export destinations of the Philippines increased by 7.9 percent to $5.97 billion. Increases were recorded across all 10 destinations except Germany, with the highest gain in Singapore at 22 percent.

China was the top export destination with $1.18 billion or 16.5 percent of total exports for the month.