By Jochebed B. Gonzales, Researcher

Exports continue to rise, imports contract in April

Posted on June 10, 2017

MERCHANDISE EXPORTS grew for the fifth straight month in April, the government reported on Friday, amid a recovery in demand abroad.

Preliminary data from the Philippine Statistics Authority (PSA) showed export receipts growing 12.1% to $4.805 billion in April, slower than the 18.1% in March but reversing a 3.4% contraction in April last year.

Outbound shipments of manufactured goods, which made up 83.4% of exports, rose 3.4% to $4.006 billion.

Accounting for half of total exports, electronic products picked up by 6.8% to $2.445 billion. Shipments of the semiconductors subgroup increased 7.7% to $1.767 billion.

Exports of mineral products saw a 571% boost to $394.298 million while receipts from agro-based products including fish, coffee and tobacco products increased 11.4% to $285.431 million.

“Considering it’s still double-digit and first quarter was okay, I don’t think the slowdown is very conclusive,” said Sergio R. Ortiz-Luis, president of Philippine Exporters Confederation, Inc. (Philexport), referring to the latest headline growth figure. “The markets [abroad] continue to recover.”

Japan was the top destination for Philippine exports in April, even as shipments fell 16.6% to $710.03 million. It was followed by the United States, shipments to which decreased by 6.7% to $653.05 million.

Exports to Hong Kong and People’s Republic of China saw double-digit expansion of 36.8% and 26.4%, respectively, at $646.86 million and $534.6 million.

In the first four months, exports were recorded at $20.323 billion, up by 15.3% from $17.632 billion a year ago, exceeding the 2% projection by economic managers for the entire 2017.

The four-month trade balance however recorded a deficit of $8.587 billion, wider than $8.387 billion in the same period last year.

In April alone, the deficit was $2.052 billion as imports exceeded exports at $6.857 billion despite dipping 0.1% from $6.865 billion a year ago.

Comprising a third of the total imports, capital goods purchases from abroad dipped 2.3% to $2.282 billion. Consumer goods also fell 11.2% to $1.052 billion.

Inbound shipments of raw materials and intermediate goods increased by 8.2% to $2.768 billion.

“Imports contracted in April 2017, as domestic demand slowed this year due to lack of boost from election spending,” said Guian Angelo S. Dumalagan, market economist at Land Bank of the Philippines (Landbank).

China was the biggest source of imports with payments amounting to $1.24 billion, followed by Japan with $854.43 million.

Year-to-date, imports reached $28.91 billion, up by 11.1% from $26.02 billion in the same period last year.

“Trade will continue to improve and exports will continue to recover as global trade is expected to recover as well. This contraction of imports may be temporary and we may see imports rebound next month,” said Union Bank of the Philippines chief economist Ruben Carlo O. Asuncion.

Landbank’s Mr. Dumalagan agreed but also pointed to a narrower trade deficit following an election year when spending surged.

“External trade might contribute to growth in the second quarter of 2017 due to expectations of stronger demand from foreign countries. An increase in exports might be accompanied by a decrease in imports, especially since domestic demand might decelerate from last year’s election boost,” Mr. Dumalagan said.

For Security Bank Corp. economist Angelo B. Taningco, a narrower trade gap could help lift gross domestic product (GDP), which fell below expectations in the first quarter.

“The trade deficit in April was lower than its first-quarter average due to relatively strong export growth vis-‡-vis import growth,” he said.

“If a lower trade deficit persists in May and June similar to April, then GDP growth for the second-quarter will probably be faster than the first quarter,” he added.