THE volume of domestic trade in goods rose in the fourth quarter of 2017 but declined in terms of value, the Philippine Statistics Authority (PSA) said.

Volume was 6.476 million tons during the quarter, up 4.2% from a year earlier, according to preliminary data, while the tally for value was P176.393 billion, down 2.9%.

The domestic commodity flow indicator measures the regional flow of goods through the water, air, and rail transport systems. Some 99.9% of trade traveled by water.

Four out of the 10 commodity categories monitored by the PSA reported an increase in volume. Food and live animals — which accounted for the biggest share of trade in terms of volume — rose 72.5% by volume to 2.501 million tons. by value, the category fell 6.1% to P41.709 billion.

Coming in second were “manufactured goods classified chiefly by materials,” which rose 48.7% by volume to 1.024 million tons. By value, the category rose 7.4% to P21.250 billion.

On the other hand, “crude minerals, inedible except fuels” declined 70.8% by volume during the quarter to 323,615 tons. Value, on the other hand, rose 20.6% to P4.198 billion.

The National Capital Region was the top source of commodities, with outflows amounting to P33.263 billion. The region had a domestic trade surplus of P6.879 billion.

The Bicol region was the top destination of commodities, with total inflows amounting to P29.132 billion and a trade deficit of P25.323 billion.

“The increase in the volume of domestic trade was expected given the country’s upbeat domestic demand. Likewise, the deceleration to 4.2% [in the fourth quarter of 2017] from the 25.8% in 2016 was also expected due to the normalization in consumer spending following the 2016 elections,” said Guian Angelo S. Dumalagan, market economist at Land Bank of the Philippines (LBP).

Mr. Dumalagan said the decline in value was due to the lower prices of food and live animals, which accounted for about 38.6% of domestic trade in terms of quantity.

“The drop in value might probably be attributed to the strong performance of the agricultural sector during the period. In the fourth quarter of 2017, the agricultural sector posted growth of 2.2%, a rebound from the 1.09% drop in the same period a year earlier,” Mr. Dumalagan said, citing the fourth quarter results of the PSA’s farm output report.

“Upbeat agricultural production likely kept prices low, despite firm domestic demand.”

Michael L. Ricafort, economist at the Rizal Commercial Banking Corp. (RCBC) concurred, “The increased supply of domestic goods that are heavier in tons but with relatively lower values… [led] to a decline in prices on a year-on-year basis.”

Cheaper foreign imports such as cement “may have led to lower prices of other locally traded goods and the corresponding increase in their trade volumes,” Mr. Ricafort said.

George N. Manzano, an economist at the University of Asia and the Pacific, said excess supply of these commodities may explain the movements in volume and value.

“The numbers [volume and value] do not add up because we have inflation and peso depreciated during the quarter,” Mr. Manzano said.

The economist also expected the prices during the period to have gone up on account of the increased demand brought by the year-end holidays.

“If this is not the case, then it is possible that supply has exceeded demand, which lowered prices during the quarter,” he said.

Economists expect both domestic trade volume and value to pick up this year on account of the increase in household disposable income brought by the Tax Reform for Acceleration and Inclusion (TRAIN) law and business expansion nationwide.

“Higher government spending and lower personal income taxes will keep domestic demand firm, and consequently fuel domestic trade. The impact of these positive factors, however, might initially be overshadowed by some disruption in spending due to higher inflation brought about the imposition of added excise taxes,” LANDBANK’S Mr. Dumalagan said.

“The value of trade is expected to pick up due to elevated inflation amid the recently implemented TRAIN law. [This] despite potentially upbeat agricultural production this year, which could weigh down on the costs of agricultural products.”

RCBC’s Mr. Ricafort added, “Domestic trade [will continue] to grow in the coming quarters of 2018. The major Philippine nationwide chains, especially retailers, have continued their expansion in the key localities outside Metro Manila.”

“Furthermore, real estate projects and construction activities, including infrastructure projects, also continued to pick up as the biggest real estate companies have continued to expand in key localities outside Metro Manila… As a result, the domestic trade has increased among different regions in the country, especially with Metro Manila and with other key trading hubs,” he added. — Carmina Angelica V. Olano