Imports up 16.5% to $4.46B in July on higher oil prices

The country’s imports rose 16.5 percent to $4.46 billion in July, reflecting higher crude oil prices, the National Statistics Office (NSO) reported yesterday.

The trade deficit widened to $508 million compared with a deficit of $330 million in July last year.

NSO earlier reported that exports in July had grown 12.9 percent to $3.96 billion.

Electronics imports, which accounted for 43.6 percent of the total import bill in July, rose 3.1 percent year-on-year to $1.95 billion. The bulk of these imports are parts for the Philippines own electronics exports.

Imports of mineral fuels, lubricants and related materials accounted for 17.5 percent of imports or $782 million, up 89.7 percent from last year.

Imports for the seven months to July rose 9.6 percent year-on-year to $29.04 billion, compared to exports growth of 16.2 percent to $26.69 billion.

The trade deficit in the first seven months of the year narrowed to $2.34 billion from $3.52 billion in the same period last year.

The government has cited high oil prices as a threat to its aim of boosting the $98 billion economy by 5.5 percent this year from five percent in 2005.

The country is counting on higher fuel prices being offset by a doubling in export growth to create jobs.

"The Philippines is getting a nasty convergence of high oil imports and low electronics exports," said George Worthington, chief Asia-Pacific economist at Thomson IFR in Sydney. "Local electronics makers are finding it very difficult to compete with China. The slowdown in electronics imports is certainly a concern."

Electronic imports rose 3.1 percent to $1.95 billion, slowing for a third month, as manufacturers including Texas Instruments Inc. and Toshiba Corp. moderated purchases of raw materials to build computer disk drives and cell phone chips to export.

Toshiba and Matshusita Electronic Industrial Co. are among companies that have shifted some production to China from the Philippines, where transportation problems and expensive, fluctuating power supply damps sales and investment. Matsushita Electric, the world’s largest electronic maker, closed its mobile-phone assembly plant in the Philippines in December.

Toshiba in 2004 moved notebook assembly operations to China from the Philippines, costing the country as much as $1 billion of exports a year, according to the Semiconductor and Electronics Industries of the Philippines Association Inc.

Capital goods imports rose 14 percent to $1.46 billion while consumer goods gained 17 percent to $333.2 million. Raw materials were little changed at $1.8 billion.

Socioeconomic Planning Secretary Romulo Neri attributes the increase of broad-based investment growth. "The present figure presents a broader investment recovery as capital build-up was recorded in the form of telecommunication equipment and electrical machinery, power generating and specialized machines, and aircraft, ships and boats," Neri said. — AFP