THE Philippines' trade deficit narrowed to a three-month low in January this year, according to preliminary Philippine Statistics Authority (PSA) data released on Friday.
Imports surged 27.5 percent year on year to $10.73 billion while exports increased 8.9 percent to $6.04 billion.
As a result, the January trade shortfall was $4.69 billion, the narrowest since October last year's $4.02 billion. However, it is wider than the $2.87-billion gap from a year ago.
“The annual increment of imported goods in January 2022 was due to the increase in nine of the top 10 major commodity groups which was led by medicinal and pharmaceutical products with 240.9-percent annual increase,” the PSA noted.
Imports of mineral fuels, lubricants and related materials saw an uptick of 97.2 percent, followed by transport equipment, which jumped by 46.2 percent.
“Of the top 10 major commodity groups in terms of the value of exports, five recorded annual increases, which was led by coconut oil (110.1 percent),” the PSA said in the meantime.
Other manufactured goods (53.4 percent) and cathodes and sections of cathodes, of refined copper (46.0 percent) followed.
Michael Ricafort, Rizal Commercial Banking Corp. (RCBC) chief economist, said the January trade deficit was largely due to the weaker peso exchange rate against the US dollar in recent months.
He also said a spike in new Covid-19 cases in January this year, which resulted in greater restrictions and a higher Alert Level 3 in Metro Manila and many other cities and provinces, hampered economic activity as well as some export and import transactions.
Nonetheless, Ricafort added that the reopening of the economy might result in a substantial increase in both imports and exports.
“Disruptions in the global supply chains would also present opportunities for some Philippine exporters to service increased demand amid improved recovery prospects for the global economy and trade,” he noted.
It could, however, be offset by slower economic recovery prospects due to the Russia-Ukraine conflict, which could slow global trade and add to supply chain disruptions amid increased sanctions on Russia and as more global companies decide to stop doing business with Russia, which could have an indirect negative impact on the country's exports and imports, the RCBC economist warned.
He also said the recent rise of Covid-19 cases in several nations throughout the world, owing in part to the more transmissible varieties, which resulted in some limitations, could be a drag on economic recovery prospects as well as export and imports.
Given the sharp increase in global oil and commodity prices following Russia's invasion of Ukraine and amid continued disruptions in global supply chains that could be exacerbated by relatively higher new Covid-19 cases in some countries worldwide, Ricafort believes the trade deficit could remain at $4 billion to $5 billion per month for as long as global oil and commodity prices remain elevated.
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