Trade gap hits record high $6 billion in August

MANILA, Philippines — The country’s trade gap hit a new monthly record high in August as imports posted double-digit growth while exports contracted.

Preliminary data from the Philippine Statistics Authority (PSA) showed the balance of trade in goods or the difference between the value of exports and imports posted a $6-billion deficit in August, almost double the $3.31-billion gap in the same month last year.

The August trade deficit is also higher than the $5.989-billion trade shortfall in July.

The country’s imports rose by 26 percent to $12.41 billion in August from $9.85 billion in the same month a year ago.

On the other hand, the country’s export sales dipped by two percent to $6.41 billion in August from $6.54 billion in the same month in the previous year.

Overall external trade in goods in August amounted to $18.82 billion, up 14.8 percent from $16.39 billion in the same month last year.

Rizal Commercial Banking Corp. chief economist Michael Ricafort said the trade deficit widened to a monthly record in August due to “the elevated prices of imports of oil and other major commodities largely brought about by the Russia-Ukraine war since Feb. 24, 2022, as well as the further reopening of the local economy toward greater normalcy that fundamentally led to some pickup in imports.”

PSA said imports of mineral fuels, lubricants and related materials surged by 75.6 percent to $1.93 billion in August from $1.1 billion in the same month last year.

Ricafort said the record trade deficit may also be due to the seasonal increase in imports by some manufacturers in preparation for the higher demand or sales in the fourth quarter.

PSA said imports of raw materials and intermediate goods accounted for the biggest share or 39.7 percent of the total imports, amounting to $4.92 billion in August, up 15 percent from $4.28 billion in the same month a year ago.

Imports of capital goods, which accounted for a 27 percent share, climbed by 15.2 percent year-on-year to $3.35 billion in August.

Consumer goods, which had a 17.3 percent share in imports, grew 45.9 percent year-on-year to $2.15 billion in August.

China remained the biggest source of the imports, valued at $2.71 billion or 21.8 percent of the total in August.

As for the country’s exports, PSA said four of the 10 major commodity groups recorded annual decreases in value such as mineral products (-23.8 percent), chemicals (-9.5 percent), machinery and transport equipment (-2.4 percent) and electronic products (-1.6 percent).

The US was the country’s top export destination in August, with outbound shipments amounting to $1.05 billion or a 16.3 percent share of the total exports during the month.

Philippine Exporters Confederation Inc. president Sergio Ortiz-Luis Jr. said in a telephone interview that while exports declined year-on-year in August, the group does not see this as a trend.

“For the year 2022, (exports) will be higher against 2021 except it will not be as expected,” he said.

He said the group’s projection for total exports this year is around $100 billion.

From January to August, the trade deficit ballooned to $41.81 billion from $24.77 billion in the same period a year ago.

Total imports went up by 26 percent to $92.97 billion during the eight-month period.

Meanwhile, total exports increased by 4.4 percent to $51.16 billion from January to August.