Global disruptions dampen Philippine foreign trade's ascent in April

MANILA, Philippines — Global headwinds weighed on foreign trade in April, state statisticians reported Thursday, and such disruptions are expected to persist in the coming months.

What’s new

External trade rose 16.2% year-on-year to $17.03 billion in April, data from the Philippine Statistics Authority showed. This was slower than the 18.7% annual growth rate in March.

Data showed exports grew 6% year-on-year to $6.13 billion in April, marking its 14th straight month of growth. However, sales of electronic products, the country’s top exports, amounted to $3.25 billion in April, up by only 0.8% year-on-year.

Imports, meanwhile, grew at an annualized rate of 22.8% to $10.9 billion in April driven by inbound shipments of expensive fuel.

The Philippines' trade deficit, which occurs when imports bill exceeds export sales, amounted to $4.77 billion in April, 4.6% smaller than the previous month. But on an annual basis, the trade gap widened 54.1%.

Why this matters

Trade on the mend is a welcome development as the country looks to bounce back from a historic economic meltdown induced by the pandemic.

By all accounts, trade regained much of its pre-pandemic vigor last year as it finished 2021 with better figures.

What an analyst says

For Nicholas Antonio Mapa, senior economist of ING Bank in Manila, ongoing work disruptions in China, and Russia's continued invasion of Ukraine will continue to unsettle global supply chains. This, in turn, is expected to fan inflation at home.

"Work stoppages in China and the ongoing conflict in Ukraine are likely to keep supply chains snarled and commodity prices high.  This is one of the main reasons for the resurgent global inflation dynamic which is oftentimes fanned by improving demand conditions as the specter of Covid abates somewhat," he said in an emailed commentary.

"Such a dynamic will keep the current account balance likewise in the red, which will keep pressure on PHP in the coming months.  A weaker currency has contributed to imported inflation and will also likely add more fuel to the already hot inflation fire," Mapa added.