Exports snap 6-month losing streak

By Marissa Mae M. Ramos, Researcher

LATEST TRADE growth data showed exports snapped a six-month losing streak in September, while imports declined albeit at a slower pace that same month.

Merchandise exports grew by 2.2% to $6.22 billion in September following a 12.8% annual decline in August, preliminary data by the Philippine Statistics Authority showed.

September marked the first expansion in exports in seven months or since February when it posted an annual growth of 2.8%.

Meanwhile, merchandise imports declined by 16.5% to $7.92 billion, lower than the 21.3% contraction recorded in August, as well as the slowest since February’s -11.6%.

The trade deficit in September stood at $1.71 billion, smaller than the $3.41-billion gap in the same month last year.

Year to date, exports of goods amounted to $45.87 billion, down by 13.8% compared with the $53.21 billion in 2019’s comparable months. Still, this was below the 16% contraction expected this year by the Development Budget Coordination Committee (DBCC).

Meanwhile, imports were down 26% to $61.95 billion on a cumulative basis against the DBCC’s expectation of an 18% contraction for the year.

That brought the year-to-date trade balance to a $16.07-billion deficit, smaller than the $30.48-billion shortfall in the same nine months last year.

The country’s total external trade in goods — the sum of export and import goods — was $14.14 billion in September, 9.2% down year on year. This brought the total trade in the nine-month period to $107.82 billion, 21.2% lower than the $136.90 billion a year ago.

Export of manufactured goods, which account for around 83.4% of the total exports that month, grew 1.6% year on year to $5.19 billion from $5.11 billion last year.

Total agro-based products were down 17.1% to $367.67 million in September from $443.38 million previously.

Electronic products, which made up more than half of the total September export sales, edged up by 0.8% to $3.63 billion. Semiconductors, which account for more than three-fourths of electronic products, also grew by 0.8% to $2.78 billion.

Exports of mineral products jumped by 41.3% to $518.61 million. Meanwhile, petroleum products exports amounted to $257,323, 4.6 times higher than $55,993 in September 2019.

On the other hand, exports of forest products slipped by 6.5% to $29.85 million from $31.94 million.

On the import side, raw materials and intermediate goods, which contributed 40.5% to the goods import bill in September, declined by six percent to $3.21 billion from $3.42 billion in the same month last year.

Imports of capital and consumer goods also went down 17% ($2.58 billion) and 13.8% ($1.49 billion) in September, respectively. Imports of mineral fuels, lubricant, and related materials likewise dropped 51.4% to $558.79 million.

“Philippine trade likely benefited from improved global trade around September with China’s economic recovery lifting trade prospects. China remained our largest trade partner in September,” Security Bank Corp. Chief Economist Robert Dan J. Roces said in a note.

“Month-on-month import growth may signal some demand recovery as we slowly get out of stricter quarantine measures, while export growth was driven by global demand for electronic products,” he added.

In a separate note, ING Bank N.V. Manila Branch Senior Economist Nicholas Antonio T. Mapa pointed to the narrowing trade deficit brought by a “broad-based decline in economic activity.”

For the month, China was the top market for Philippine goods, accounting for 19.6% of the total or $1.22 billion. It was followed by Japan with a 15.7% share ($974.78 million) and the United States’ 14.5% share ($903.46 million).

China was also the country’s biggest source of foreign goods purchased in September, accounting for 25.3% of the total at $2.01 billion. Other major import trading partners were Japan and Korea, which accounted for 9.1% ($723.74 million) and 8.1% ($642.85 million) of total imports, respectively.

External trade is likely to pick up in the remaining months of 2020, economists said.

Citing the country’s latest manufacturing purchasing managers index (PMI), Security Bank’s Mr. Roces noted the increase in new orders from abroad for the second straight month despite the PMI contracting in October.

“For imports, the Bureau of Customs reported exceeding its collections target in October due to higher import volumes and better valuation, thus we expect imports to go up as well. If realized, the improved trade momentum may likely be sustained until the end of the year,” Mr. Roces added.

For ING Bank’s Mr. Mapa: “The sharp contraction in the trade deficit has helped the current account swing back into surplus which remains a positive for [the Philippine peso] in the near term. However, the sustained downturn in imports of raw materials and capital goods points to a continued deterioration in productive capacity and potential output, which does not bode well for prospects for the economic recovery.”

In an e-mail, UnionBank of the Philippines, Inc. Chief Economist Ruben Carlo O. Asuncion expects the decline in exports and imports to average 9.4% and 23.8% for 2020, respectively.

“These are actually better than what we initially expected for exports and imports at -12.2% and -26.1%, respectively. With the economy reopening and a general improvement of the external environment due to lesser people movement restrictions, we see trade improving further,” he said.