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Trade deficit narrows to $3.39 billion in July

September 11, 2019

THE country’s trade deficit narrowed to $3.39 billion in July from $4.01 billion in the same month last year as exports outpaced imports, the Philippine Statistics Authority (PSA) reported on Tuesday.

A worker walk past shipping containers in the Manila’s North Harbor on August 17, 2019. PHOTO BY DJ DIOSINA

Data from the state-run statistics agency showed that export sales grew by 3.5 percent to $6.17 billion from $5.97 billion a year ago.

Increases were seen in the export sales of gold, fresh bananas, machinery and transport equipment, electronic equipment and parts, ignition wiring set and other wiring sets used in vehicles, aircraft and ships, other mineral products, other manufactured goods, and electronic products.

The total value of imported goods, meanwhile, contracted for the fourth consecutive month, dropping by 4.2 percent to $9.57 billion from $9.98 billion.

This decline was attributed to lower imports of iron and steel, mineral fuels, lubricants and related materials, transport equipment, telecommunication equipment and electrical machinery, and industrial machinery and equipment.

Total external trade in goods during the month decreased by 1.3 percent to $15.74 billion this year from $15.95 billion in 2018.

Month-on-month, the deficit was an expansion from the $2.47 billion recorded in June.

Exports still resilient

In a statement on Tuesday, the National Economic and Development Authority (NEDA) said there was a need to further build strategic relationships with key trading partners and address issues in boosting the competitiveness of the agriculture and manufacturing sectors to enable the country’s trade to withstand global challenges.

“Philippine exports remained resilient during the second quarter of 2019 despite…external challenges, such [as] trade tensions between the US and China, the bleak outlook in Europe, and the uncertainty of the future of Brexit,” Socioeconomic Planning Secretary Ernesto Pernia said in the statement.

According to him, the impact of the ongoing trade war between Washington and Beijing are beginning to show as global manufacturing sentiment continued to falter, with the manufacturing purchasing manager indexes for Japan, South Korea and Taiwan continued to decline in July.

“The country’s manufacturing sector is expected to sustain its growth despite the overall decline in global manufacturing. We are optimistic as we see a reduction of global oil prices, the recent cuts in electricity rates, and the lower import costs due to the appreciation of the peso,” the NEDA chief said.

He also said the country’s resiliency may attract locators seeking alternatives to China, where goods are being subjected to increasing US tariffs.

The conclusion of the Philippine-South Korea Free Trade Agreement and the Regional Comprehensive Economic Partnership are also expected to increase trade and investment opportunities for the Philippines.

Pernia also underscored the importance of addressing issues in the agriculture sector.

“As the country continues to pursue programs that will pave the way for the resurgence of the manufacturing sector, increasing the competitiveness of agricultural producers, particularly rice farmers, should continue to be prioritized,” he said.

Long-term measures, especially the proper implementation and distribution of the Rice Competitiveness Enhancement Fund (RCEF), would have a huge impact on sustaining and expanding the rice sector, the socioeconomic planning secretary added.

“Greater scrutiny in regulating the distribution and the retailing of rice as the decline in farm gate prices, however, have not been translated into substantially lower retail prices of rice.”

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