THE country’s trade deficit narrowed to its lowest in over five years in April. — BW FILE PHOTO

PHILIPPINE international trade performance further shrank in April as the coronavirus disease 2019 (COVID-19) pandemic and the global lockdown restrictions constricted trade activity, the Philippine Statistics Authority (PSA) reported on Wednesday.

Preliminary data by the PSA showed merchandise exports in April contracted by 50.8% to $2.78 billion compared to a revised 24.7% decline in March and a 3.1% uptick recorded in April 2019.

Merchandise imports also plummeted 65.3% to $3.28 billion in April, worsening from a 26.2% decline in March and a 2.9% growth posted in the same month last year.

The April figures marked the biggest year-on-year declines in exports and imports based on available PSA data, surpassing the previous lows of 40.6% for exports in January 2009 and 37.1% for imports in April 2009.

Moreover, the trade figures in April marked the lowest levels since the $2.51 billion worth of exports in February 2009 and $3.06 billion of imports in April 2009.

Philippine trade year-on-year performance (April 2020)

The trade deficit in April stood at $499.21 million, significantly lower than the $3.80-billion shortfall in the same month last year. The April deficit was the narrowest in more than five years, or since the $257.18-million trade gap in March 2015 and the $64.95-million trade surplus in May 2015.

The country’s total external trade in goods — the sum of export and import goods — was $6.07 billion in April, 59.8% less than the $15.10-billion total in the same month last year. So far, total trade amounted to $45.06 billion, 23.1% less than $58.59 billion in January-April 2019.

For the four months to April, exports were down 16.7% to $18.52 billion, well below the four-percent drop expected this year by the Development Budget Coordination Committee (DBCC), an interagency body that sets macroeconomic and fiscal assumptions of the government.

Meanwhile, the import bill slid by 27% to $26.54 billion on a cumulative basis against the DBCC’s target of a 5.5% contraction for the year.

Year to date, trade balance amounted to an $8.03-billion deficit, narrower than the $14.14-billion trade gap in 2019’s comparable four months.

Export of manufactured goods, which account for around 74% of the total exports that month, declined 55.9% year on year to $2.05 billion from $4.66 billion last year. Total agro-based products were also down 36.4% to $302.91 million in April from $476.22 million previously.

Electronic products, which made up more than half of the total April export sales, plunged by 48.6% to $1.6 billion. Semiconductors, which account for more than four-fifths of electronic products, slumped 41.9% to $1.33 billion.

Exports of forest and mineral products likewise fell by 67.2% and 10.5%, respectively to $7.87 million and $317.73 million. On the other hand, exports of petroleum products amounted to $56.2 million, more than 18 times the $3.03 million in April 2019.

On the import side, raw materials and intermediate goods, which contributed 44.7% to the goods imports bill in April, shrank 58% to $1.47 billion from $3.49 billion in the same month last year.

Capital and consumer goods also went down 58.2% ($1.23 billion) and 76.1% ($387.33 million) in April, respectively. Imports of fuels, lubricant and related materials likewise dropped 87.4% to $163.74 million.

April’s decline, according to the National Economic and Development Authority (NEDA), was due to production supply chain bottlenecks and reduced external demand amid the pandemic and the subsequent lockdown in Luzon.

“For faster trade growth recovery, the government needs to intensify its efforts by prioritizing structural and logistics reforms that will serve as the backbone of ongoing efforts to improve the business environment and create development opportunities,” acting Socioeconomic Planning Secretary and NEDA Director-General Karl Kendrick T. Chua said in a statement.

“The Philippines… experienced a much sharper decline in exports and imports in April [compared to March]… as the world’s biggest economies such as the US, Europe, and other Asian countries (including the Philippines’ biggest export markets and sources of imports)… entered into lockdowns as well, thereby fundamentally cutting exports and imports of the Philippines as aggravated by disruptions in logistics and supply chains locally and globally,” said Rizal Commercial Banking Corp. (RCBC) Chief Economist Michael L. Ricafort said in an e-mail.

Mr. Ricafort said the sharp drop in global oil prices in April that “reflects the dramatic decline in demand for oil at the height of the lockdowns may have also helped narrow the country’s trade deficit.”

In a separate e-mail, UnionBank of the Philippines, Inc. Chief Economist Ruben Carlo O. Asuncion attributed the steep declines to “non-pharmaceutical interventions” (NPI) that were implemented in April to control the spread of COVID-19.

“Aside from the fact that a lot of our major trading partners were also implementing NPIs, China, a significant global trading, was only then starting to lift up economic restrictions, including trade-related ones,” Mr. Asuncion said.

“For the succeeding months, it is expected that trade will cautiously recover as NPIs are lifted across countries in Asia, including our significant trading partners. However, trade environment and demand will continue to be sluggish as the economies continue to deal with COVID-19 and subsequent trade-weakening restrictions,” he added.

Mr. Asuncion said the narrowing of the trade balance, and thus the overall view on trade “will not be able to translate to more economic activity.”

“A clear recovery of trade demand and a better global trading environment is definitely needed,” he said.

In a note to reporters, ING Bank N.V. Manila Branch Senior Economist Nicholas Antonio T. Mapa said the demand for imports would likely resume in the next few months, but the same could not be said for the country’s exports.

“The government has pointed to the resumption of its ‘Build, Build, Build’ infrastructure program as a means to combat the fallout from the COVID-19 pandemic and we expect import growth to return in the coming months. Inbound shipments for construction materials, fuel and capital machinery used for construction will likely bloat the import bill at a time where export prospects look bleak given projected recessions in major trading partners like the US, Japan and China,” Mr. Mapa said.

Hong Kong was the top market for Philippine goods in April, accounting for 20.9% with $582.07 million. It was followed by China with a 13.8% share or $385.28 million, and Japan’s 13.1% share or $363.40 million.

On the other hand, China was the biggest source of foreign goods purchased in April, accounting for 22.3% at $732.47 million. Other major import trading partners were Japan and South Korea, which contributed 10.9% ($357.55 million) and 9.1% ($299.54 million), respectively. — Lourdes O. Pilar

RELATED ARTICLESMORE FROM AUTHOR