THE Philippines’ trade balance in September reached its widest deficit in nine months as imports growth continues to rise as exports growth keep falling, the Philippine Statistics Authority (PSA) reported on Wednesday.
According to the agency’s data, inbound shipments increased by 26.1 percent year-on-year to $9.754 billion and outbound ones dropped by 2.6 percent to $5.827 billion.
The National Economic and Development Authority (NEDA) blamed the contraction in exports to weak global growth, which it said dragged sales of manufactures and minerals.
“Downward adjustments in economic growth forecasts signal that global growth may have already peaked. Global growth is seen to remain on the positive but to decelerate and be uneven across countries,” Socioeconomic Planning Secretary Ernesto Pernia said in a statement.
Imports growth was credited to purchases of capital goods, or materials used for infrastructure projects, which grew by 25.4 percent in September, continuing its double-digit growth rate for the sixth month.
These purchases, which amounted to more than $26 billion, accounted for 32.5 percent of imports in January to September, according to NEDA.
“The growth in [capital-good imports] could indicate that firms are making long-term investments. The import of raw materials and intermediate goods could also indicate the vibrancy of the manufacturing sector, as it is expected to sustain its positive growth in the remaining months of 2018,” Pernia said.
“Philippine import payments are seen to remain elevated until 2019, primarily due to imports of capital goods and raw materials to sustain the government’s Build, Build, Build infrastructure and manufacturing resurgence programs,” he added.
Total trade in goods balance hit a deficit of $3.927 billion in September, more than double the $1.752 billion posted a year ago and the highest since December 2017’s $3.972-billion deficit.
Year to date, the trade deficit widened by 70.5 percent to $29.910 billion from $17.543 billion, as exports contracted by 2.1 percent amid 16.3-percent growth in imports.
ING Bank Manila senior economist Nicholas Antonio Mapa said the September deficit “indicates that the current account [is likely to] remain in the red, as capital imports and raw material growth are not expected to slow down in the near term, as imports feed the burgeoning economy.”
Although Mapa said “robust import growth reflects a healthy and burgeoning economy moving into a higher growth path,” he noted that “exports remain the missing link to the new Philippine growth story.”
“Going forward, the current account will likely remain in deficit, with the Philippine peso looking to structural flows, such as remittances ahead of the holiday season and the capital and financial account for support,” he added.
The country’s current account—a major component of the balance of payments—hit a deficit of $3.087 billion in the first half of 2018, equivalent to 1.9 percent of gross domestic product.