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PNB: Trade gap may widen in H2

June 14, 2019

DESPITE narrowing slightly in April, the country’s trade deficit may widen in the second half of the year, the Philippine National Bank (PNB) said on Thursday.

In its “Macro Alert” report, the listed Tan-led lender said its “extrapolation of the monthly trade data continues to show a worsening trade deficit outlook later in 2H19 (second half of 2019), peaking at roughly $4 billion [a] month that coincides with the fiscal spending ‘catch-up’ and its likely lift to broad-based demand.”

The Philippine Statistics Authority reported on Tuesday that the trade gap to $3.499 billion in April from $3.699 billion in the same month last year, as exports recovered and imports contracted. The latest figure, however, remained higher than March’s $3.1 billion.

A trade deficit exists when a country spends more money annually on imports than it receives from its exports.

“Lackluster exports (+0.4 percent relative to a year ago) was accompanied by a larger import drop (-1.9 percent),” the report said.

“While shipments of manufacturers yielded lean growth, exports to US and China posted string gains, despite the ongoing US-China trade conflicts and its implied threat to [the] supply chain [and] export industries,” it added.

“Imports of fuel/oil and non-durable consumer goods bucked the year-ago base effect.”

The decline in the value of imports was due to reduced payments for raw materials and intermediate goods (-16.3 percent), zero growth in capital goods imports, and the slowdown in purchases of consumer goods (7.6 percent).

The positive exports growth in April was attributed to the recovery of agro-based products (31.1 percent) and uptick in sales of manufactured goods (2.0 percent).

Exports to the United States, China and South Korea grew by 10.6 percent, 20.4 percent and 46.5 percent, respectively.

“The slight deterioration of the trade deficit in April amid a recent high posted by official reserves, is unlikely to nudge the PHP (Philippine peso) to a weaker trading range,” PNB said.

“Near-term, the trade deficit may be PHP-neutral. We remain bearish on the trade gap and its PHP impact in 2H19,” it added.

Credit belongs to : www.manilatimes.net

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