The country’s trade deficit further widened in May, the government reported on Tuesday, as imports continued to post double-digit growth and exports contracted anew.
Merchandise exports for the month fell by 3.8 percent to $5.76 billion from a year earlier while inbound shipments grew by 11.4 percent to $9.46 billion, the Philippine Statistics Authority (PSA) said, bringing the trade balance to a deficit of $3.7 billion.
The result was up from April’s $3.62 billion and the $2.51 billion recorded in May 2017.
Year to date, the trade deficit widened to $15.77 billion from $10.16 billion a year earlier, with imports far outweighing exports at $42.7 billion versus $26.9 billion, respectively.
The continued rise in imports, Bangko Sentral ng Pilipinas (BSP) Deputy Governor Diwa Guinigundo told reporters, is a sign that the economy will keep growing.
“We continue to see higher imports particularly on capital goods. It is still double digit,” he said.
“In fact, capital goods, raw materials and intermediate products account for more than 80 percent of the imports,” Guinigundo added.
PSA data showed that raw materials and intermediate goods accounted for the largest share at 36.7 percent, increasing by 4.3 percent to $3.48 billion.
Capital goods imports totaled $3.16 billion, up 10.1 percent and accounting for 33.4 percent of the total inbound shipments for the month.
“They are related to production and investments. [Hence], it is growing economy,” Guinigundo said.
The government remains confident that the economy will still hit this year’s 7.0-8.0 percent target — despite challenges such as rising inflation and a weaker peso — on the back of higher consumption, increased infrastructure spending under the ‘Build Build Build’ program and brighter tourism prospects.
Gross domestic product growth picked up to 6.8 percent in the first quarter, higher than the 6.5 percent posted during the last three months of 2017.
The National Economic and Development Authority (NEDA), meanwhile, said the latest trade figures should prompt the government to implement strategies that would support the country’s exporters.
Socioeconomic Planning Secretary Ernesto Pernia said cumbersome regulations needed be addressed while trade facilitation and access to financing should be enhanced to improve the business climate.
The recently-approved Ease of Doing Business Act will help, he said, as the law aims to reduce red tape and corruption.
“Its timely implementation is needed to improve trade facilitation,” Pernia added.
Opportunities from free trade agreements (FTAs) should also be maximized, the NEDA chief said, by facilitating programs that will increase awareness of industry players on the benefits.
FROM REPORTS BY ED VELASCO AND MAYVELIN U. CARABALLO