Trade deficit falls to $1.834B

Improved economic conditions have contributed to a significant fall in the country’s trade deficit to $1.834 billion in the first six months of the year from $3.194 billion in the same period last year, the National Statistics Office (NSO) reported yesterday.

Analysts said a narrowing trade gap will help the government end a decade of budget deficits by freeing cash to pay off debt and spend on public works, such as roads and ports needed to attract investors.

David Cohen, director of Asian economic forecasting at Action Economics LLC in Singapore, said the trade figures for the first half "reflect a generally healthy trade sector and this will certainly contribute to overall economic growth in the Philippines."

For June alone, the trade deficit narrowed to $484 million from $852 million a year ago.

Merchandise imports in June rose 7.7 percent from a year earlier to $4.53 billion while exports grew 20.6 percent to $4.05 billion.

Cohen said demand for electronics remained solid, despite uncertainties arising from the volatility of crude oil prices.

Despite record-high oil prices, the government is confident economic growth this year will be quite strong.

The government is set to release gross domestic growth (GDP) figures for the three months to June next week.

In the three months to March, the economy grew 5.5 percent, which is the same target for the entire year.

"The past six months have been a period of steady economic improvement for the Philippines," Rene Pizarro, head of the governments Investor Relations Office said recently.

"The strong economic showing for the first half of the year clearly demonstrates the positive impact of the governments economic reform program and rising investor confidence in the Philippines," he added.

Total trade for the first six months of the year reached $47.308 billion, up from $42.137 billion last year while imports grew 8.4 percent to $24.571 billion, the NSO said.

Exports, on the other hand, rose by a stronger 16.8 percent to $22.737 billion during the six-month period from $19.471 billion a year ago.

The bulk of imports are raw materials for export products, which are mostly electronics. Electronics, which accounted for 44.8 percent of imports in June, rose 4.6 percent year-on-year to $2.032 billion.

Imports of mineral fuels, lubricants and related materials accounted for 17.5 percent, with purchases up 21.9 percent at $791.99 million.

Transport equipment accounted for 4.4 percent, with payments of $199.42 million, while payments for industrial machinery rose 19.6 percent to $173.37 million.

The United States remained the biggest source of imported goods in June, accounting for 15.6 percent of the import bill worth $707.73 million.

Imports from Japan were worth $541.97 million, or 12 percent of the total. –AFP