Trade gap widens to $1.7-B in ’03

The country’s trade deficit widened to $1.697 billion in 2003, nearly eight times higher than the $218-million deficit in 2002 as imports outgrew exports by a wide margin, the National Statistics Office (NSO) reported yesterday.

For the whole of 2003, imports rose by 5.7 percent to $37.448 billion from $35.427 billion in 2002.

Exports, on the other hand, grew by just 1.5 percent to $35.751 billion last year from $35.208 billion in 2002. Last year’s export growth was sharply lower than the 9.5-percent expansion recorded in 2002.

For December alone, the government statistics office said the country had a trade surplus of $108 million, down from a surplus of $241 million a year earlier, after recording a deficit of $322 million in November.

Merchandise imports rose 14.8 percent to $3.068 billion in December from the same month of 2002, it said.

Imports of electronic products, which are assembled locally for exports, leapt 24.7 percent to $1.497 billion from the year-ago $1.201 billion.

The government had earlier reported that exports rose nine percent to $3.176 billion in December, following a 0.6-percent drop the previous month, raising hopes that the economy was starting to benefit from a global pick-up in demand.

"This is the third surplus in four months. That’s a decent trend," said Philippine Equity Partners Managing Director Jojo Gonzales.

"The focus should really be on 2004. We really need to see a recovery in exports for the deficit to narrow."

The peso’s fall to record lows around 56.20 against the dollar, driven by political uncertainty ahead of May 10 national elections, has made imported goods more expensive.

A sharply higher deficit for the whole of 2004 underlined the economy’s struggle to emerge from the doldrums.

Analysts said it remained to be seen whether the country could improve its trade performance this year, with potentially volatile elections casting a shadow over the whole economy.

"I would think it’s the weak peso and because we had a low base last year," Christy Tan, an analyst at 4CAST in Singapore, said of the sharp rise in imports.

"It remains to be seen if the Philippines is an underperformer or outperformer relative to the rest of the region embarking on this recovery wave," she said.

"In our view, it will likely stay the underperformer, because the political situation is not working in its favor at all."

The country imports nearly all of its crude oil, electronics parts for assembly and export, industrial machinery, transport equipment, rice and wheat.

Electronics shipments account for two-thirds of Philippine exports but some analysts have expressed concern that the country does not have the right mix of products to battle its competitors, particularly fast-growing China.