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The PHILIPPINES ‘international trade results contracted once again in October as imports decreasedth consecutive month and exports returned to negative territory.
Preliminary data from the Philippine Statistics Authority (PSA) showed that merchandise exports in October contracted 2.2% year-on-year to $ 6.202 billion, compared with revised growth of 2.9% in September and a flat growth of 0.5% in October 2019. Before that, the Export growth in September marked the first expansion in seven months.
Meanwhile, merchandise imports contracted during 18th consecutive month in October 19.5% to $ 7.979 billion. This was worse compared to contractions of 15.3% and 7.6% recorded in September 2020 and October 2019, respectively.
The trade deficit for the month stood at $ 1,777 billion, down from $ 1,783 billion in September 2020 and $ 3,573 billion in October 2019.
The country’s total foreign trade in goods, or the sum of export and import goods, was 14,181 million dollars in October, 12.8% less than the 16,256 million dollars last year. This brought total trade in the 10-month period to $ 122.151 billion, 20.2% less than $ 153.159 billion a year ago.
For the 10 months through October, exports fell 12.5% to $ 52.113 billion compared to the Development Budget Coordination Committee (DBCC) projection of a 16% drop for the year.
Meanwhile, imports in the January-October period amounted to $ 70.038 billion, 25.2% less than the $ 93.605 billion last year. This exceeded DBCC’s revised target of a 20% contraction for 2020.
So far this year, the trade balance amounted to a deficit of $ 17.924 billion, narrower than the trade gap of $ 34.052 billion in the comparable 10 months of 2019.
Manufactured goods, which accounted for 84.5% of total export sales in October, fell two percent to $ 5.238 billion.
Exports of electronic products fell by Floridaby 0.3% to $ 3.584 billion in October, with semiconductors contributing $ 2.637 billion, down one percent. Electronic products accounted for almost 70% of exports of manufactured goods and more than half of all goods exported.
Exports of agricultural products decreased by 21.7% to $ 358,417 million, followed by petroleum products with a year-on-year decrease of 89.5% to $ 5,591 million.
Contrary to the trend were exports of mineral and forest products, which increased by 48.4% and 22.9%, respectively, to $ 448,951 million and $ 36,829 million.
On the import side, purchases of raw materials and intermediate goods fell 9.6% to $ 3.223 billion in October from $ 3.565 billion last year. These goods represent 40% of the country’s imported goods that month.
Capital goods, which comprise 34.3% of the total, fell 19.1% to $ 2,736 billion from $ 3,383 billion.
Consumer goods imports decreased 21.8% to $ 1,355 billion. Purchases of mineral fuels, lubricants and related materials were also reduced by 50% to Ch $ 580,329 million.
In a statement, acting secretary for socio-economic planning, Karl Kendrick T. Chua, cited some positive findings from trade data despite declines in October.
For example, he noted that companies have been responding to the government’s approach to a gradual and targeted reopening of the economy, as shown by the increase in imports of capital goods in October compared to the previous month. Furthermore, exports to major regional trading partners such as China and the Association of Southeast Asian Nations (ASEAN) have also grown by double digits.
China was the third largest market for Philippine products in October, accounting for 15.2% of total exports or $ 944.78 million. Exports to this market registered a year-on-year increase of 12.7%. The other two top markets were the United States (16.3% share or $ 1.008 billion) and Japan (15.6% share or $ 965.28 million), although year-on-year sales to these countries fell by 6 , 6% and 1.4%, respectively.
On the other hand, China was the main source of foreign goods in the country with a share of 24.4% or $ 1.95 billion, followed by Japan (share of 11% or $ 876.46 million) and the United States (share of the eight percent or $ 639.76 million).
Meanwhile, exports to ASEAN grew 10.4% to $ 1.026 billion in October, but were down 7.8% year-to-date to $ 8.305 billion.
In a note to reporters, ING Bank NV Manila senior economist Nicholas Antonio T. Mapa said that “rapidly fading domestic demand” coupled with negative investment sentiment led to imports falling by double digits by ninth. consecutive month, citing the sustained fall in capital. goods.
“With inbound shipments of capital machinery declining rapidly, we forecast a slow and arduous recovery for the Philippine economy given the likely impact on potential production,” he said.
Mapa expects “anemic exports and imports in freefall to continue until early 2021,” as both external and domestic demand are expected to be mediocre early in the year, adding that the deployment of the vaccine “will not be instant”.
“The absence of vaccines and their projected slow implementation (3-5 years according to official government estimates) will weigh on national economic activity and reduce any potential recovery in investment appetite. Therefore, we expect import demand to recover, but on a very shallow trajectory that leads to a very gradual and slow recovery for the Philippines, as it operates with a diminished productive capacity, “he said.
UnionBank of the Philippines, Inc. chief economist Ruben Carlo O. Asunción expects exports to be positive, while the decline in imports will ease in the remaining months of the year. He predicted that the fall in exports and imports at the end of 2020 will reach 9.1% and 23%, respectively, compared to the year-to-date falls of 12.5% and 25.2%.
“It is very important that the rebound in the country’s foreign trade occurs to obtain better results in the performance of GDP in 2021. Both production for exports and imports are crucial for the creation of employment and the recovery of income from the consumers, ”Asunción said, even while clarifyingbeed that the recovery in household consumption will continue to have the greatest impact on GDP performance.
In another email, Asian Management Institute economist John Paolo R. Rivera said that the recovery of trade will depend on how quickly the country’s productive capacity recovers from the damage caused by typhoons.
“[The trade sector] it was on the way to recovery, but they were hampered by calamities, “he said.
In a telephone interview, Philippine Exporters Confederation, Inc. (Philexport), President and CEO Officer Sergio R. Ortiz-Luis, Jr. said that the decline may be a matter of cutff dates and no less orders.
“The -2.2% (in exports) is still to be adjusted … I think it will improve since orders are coming from China,” he said.
“We expect the dichotomy of strong exports and suppressed imports to continue in (befirst half of 2021), which implies another current account surplus (albeit smaller) in 2021, ”said JPMorgan research analyst Milo Gunasinghe in a note sent to reporters.
“Looking ahead, taking into account the slow economic recovery, we believe that there is likely to be a material widening of the trade deficit on the line (second half of 2021). This means that the (current account) will probably remain in surplus, even if it is smaller, next year as well, ”he said.
Meanwhile, NEDA’s Mr. Chua said that improving the communications infrastructure to attract investment in digital solutions and enact logistics reforms such as streamlining the cargo system, establishing strategic warehouses and cold chain systems to reduce costs ” will play a key role “in the rally. of the commercial sector of the country. – Michelle Anne P. Soliman with tickets from Beatrice M. Laforga
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