Exports unlikely to lift Philippines trade balance soon

MANILA, Philippines — The country’s outbound shipments may not be able to immediately save the country’s trade performance,  which was already up for a weak start in the fourth quarter.

In its latest economic monitor, Pantheon Macroeconomics said trade data for October has painted a benign start to the last quarter of the year.

In October, the Philippines recorded its highest deficit in 33 months at $4.016 billion as imports continued to outpace exports.

While imports retained their uptrend since mid-2020, Pantheon senior Asia economist Miguel Chanco said indications showed that domestic demand is nowhere near being punchy.

Inbound shipments are still rising by over 30 percent even as most of the lift from last year’s extremely low base has faded.

“But over 80 percent of the growth in recent months has been on the back of imports of intermediate goods, raw materials and mineral fuels, reflecting mostly restocking and the pre-Omicron surge in global commodity prices,” Chanco said.

“Crucially, purchases of capital goods have been on a gradual downtrend since the second quarter, while those of consumer goods have been flat,” he said.

Further, Chanco maintained that exports are unlikely to come to the rescue anytime soon, should the recovery in domestic demand disappoint.

Outbound shipments have been slowing since April, with the Philippines retaining its spot as an underperformer in the emerging Asian region.

“We continue to believe that this is because of the country losing its share of the market in key industries, a structural trend that arguably was accelerated by the pandemic,” Chanco said.

“The country’s semiconductor exports have not really benefited from the recent global shortages,” he said.

In 2016, semiconductor exports equated to about 35 percent of Korea’s own shipments of chips, but this share has fallen by about 10 percentage points ever since.

Exports in October only inched up two percent to $6.41 billion, weighed down by the mainstay electronics component which only expanded marginally.

Dollar earnings from electronic products, the country’s top export, just inched up 1.7 percent to $3.65 billion.