Foreign trade sustains growth in June — PSA

MANILA, Philippines — Foreign trade rose in June due to a growing imports bill, which led to a historic-high trade deficit. 

External trade rose 16.1% year-on-year to $19.13 billion in June, data from the Philippine Statistics Authority revealed. This was slower compared to the 20.8% recorded in May. 

Exports inched up 1.0% year-on-year to $6.64 billion, its 16th straight month of growth. The country’s top export, electronic products, slid down 5.2% annually to $3.52 billion In June.

Imports ballooned 26.0% year-on-year to $12.49 billion in May filled by shipments of expensive fuel.

The Philippines’ trade deficit hit its highest ever in the PSA’s monthly series. Data showed that the deficit, which occurs when imports bill exceeds export sales, reached $5.84 billion in June, larger compared to the preceding month. The trade gap widened 75.4% on an annual basis.

Trade regained its pre-pandemic vigor since closing 2021 with resurgent figures after contracting at the onset of the pandemic. 

Sought for comment, Domini Velasquez, chief economist of China Banking Corp., isn’t too concerned about the trade deficit since it could ease in the coming months. 

“We expect falling commodity prices of both oil and food products (e.g., unmilled cereals, urea, etc), to clip the ballooning trade deficit at least for the next few months. Although a weaker external outlook does not bode well for exports, the recent weakness of the peso could rebalance the country's trade outlook,” she said in a Viber message. 

Velasquez explained that the imports bill bloated in size since the country was importing goods at higher prices. Before the pandemic, she noted that imports were high due to shipments of capital goods used for infrastructure projects, vaunted as a cornerstone policy of the previous Duterte administration. 

“This in itself is quite worrisome. You normally want high imports if it goes to capital goods and partly consumption,” she added. 

Miguel Chanco, chief Emerging Asia economist for UK-based Pantheon Macroeconomics, said in an emailed commentary that the country’s semiconductor exports fared poorly. 

“Shipments to the U.S. bounced respectably, but those to China failed to do so, holding back the topline comeback. More worryingly, exports of key semiconductors continued to slide, falling to a seven-month low in June, after adjustment,” he said.