Agricultural trade deficit narrows, sustainability still debated
From AB Capital's The Opening Bell: Three Moves
Event
PSA data showed the agricultural trade deficit narrowed 26.9% YoY to US$668mn in December as exports jumped 19% and imports fell 6%, partly due to the rice import freeze. Full-year deficit shrank 5.6%, signaling improved external balance dynamics overall trend.
View
We think the improvement is cyclical rather than structural, driven by temporary import restrictions and favorable fruit exports. In our view, agriculture’s external position is stabilizing but remains vulnerable to food inflation cycles, weather shocks, and currency-driven import cost pressures.
Catalyst
Key catalysts include sustained export momentum to ASEAN and the EU, alongside normalization of rice imports. If import volumes rebound by 10%, deficit gains could reverse quickly, while high-value crop exports may continue supporting Php stability and rural income growth.
Action
We favor selective exposure to consumer staples and food exporters benefiting from improved trade flows, while remaining neutral on import-heavy retailers. In our view, narrower deficits support Php sentiment but are not a structural shift.
Disclaimer: The information, analyses, and views contained herein is based on sources which we, AB Capital Securities, believe are reliable, but is not guaranteed by us and is not to be considered all inclusive. It is not to be construed as an offer or solicitation of an offer to sell or buy the securities herein mentioned. AB Capital Securities and its Directors and Officers and/or members of their families may have a position in the securities herein mentioned and may make purchases and/or sales of the securities from time to time in the open-market and otherwise.
- Latest
