Further widening of trade gap seen

MANILA, Philippines — Nomura Global Markets Research sees the country’s trade deficit widening further by 25.6 percent to $4.9 billion in July from $3.9 billion in June amid the continued contraction in exports and increase in imports.

“We expect the goods trade deficit to widen to $4.9 billion in July from $3.9 billion in June, as export growth turned negative again due to weak external demand, led by China, Korea and Singapore,” Nomura said in its latest weekly outlook.

The Japanese firm expects a smaller contraction in imports growth, driven in part by higher oil import costs.

Nomura said exports contracted by 0.5 percent in July after inching up by 0.8 percent in June.

Latest data from the Philippine Statistics Authority (PSA) showed the country’s trade deficit narrowed by 6.3 percent to $27.95 billion in the first half of the year.

For June alone, the country’s trade shortfall plunged by 33.3 percent to $3.92 billion from $5.88 billion in the same month last year.

Imports fell by eight percent to $62.89 billion in the six-month period from last year’s $68.38 billion. For June alone, imports shrank by 15.2 percent to $10.62 billion from $12.52 billion.

On the other hand, exports inched up by 3.6 percent to $34.94 billion in the first semester. For June, exports inched up by 0.8 percent to $6.7 billion.

The country’s trade deficit widened by 38 percent to $58.24 billion last year amid the sharp jump in imports due to elevated oil and food prices.

Data showed imports grew by 13.1 percent to $137.22 billion in 2022 from $116.88 billion in 2021, while exports inched up by 5.7 percent to $78.98 billion.

With the full reopening of the economy with the lifting of strict COVID-19 quarantine and lockdown protocols, the country’s gross domestic product (GDP) growth accelerated to 7.6 percent last year, slightly exceeding the government’s 6.5 to 7.5 percent target.

The Philippines exited the pandemic-induced recession with a 5.7 percent GDP expansion in 2021 after contracting by 9.6 percent in 2020 when the economy stalled due to strict quarantine and lockdown protocols.

The economic growth slowed to 4.3 percent in the second quarter from 6.4 percent in the first quarter of the year due to economic headwinds, elevated inflation and high interest rates that dampened consumer and government spending.

The GDP grew by 5.3 percent in the first half of the year, well below the six to seven percent target penned by economic managers via the Cabinet-level Development Budget Coordination Committee.