THE PHILIPPINE trade deficit widened in December from the previous month after exports declined to the lowest in more than two years, while imports continued to fall for the second straight month, the Philippine Statistics Authority (PSA) said on Thursday.

This brought the 2022 trade balance to a record $58.32-billion deficit, higher than the $42.23-billion gap a year earlier.

The value of merchandise exports fell by 9.7% year on year to $5.67 billion in December from a year earlier, ending three straight months of growth.

Philippine Merchandise Trade Performance (Annual)

Last month’s export decline was a reversal from 13.2% growth in November and 7.3% advance a year ago. It was also the sharpest drop in more than two years. By value, December exports were the lowest since February 2021.

Merchandise imports also declined for the second straight month by 9.9% to $10.26 billion in December, the steepest in 23 months. It was worse than the 1.6% fall a month earlier and a turnaround from 37.2% growth a year earlier. Import value that month was the lowest in 10 months.

This brought the trade-in-goods deficit — the difference between the value of exports and imports — to $4.6 billion in December, narrower than the $5.12-billion gap a year earlier. On a monthly basis, last month’s trade gap widened from November’s $3.71 billion.

Total trade — the sum of exports and imports — also fell by 9.9% to $15.93 billion in December from a year earlier. It was the first decline since January 2021 and the sharpest since October 2020. Trade value was the lowest in 19 months.

For 2022, exports rose by 5.6% to $78.84 billion from a year earlier, while imports grew by 17.3% to $137.16 billion. Export growth was better than the state’s 4% growth estimate, while import growth was below its 20% goal.

2022 trade deficit widest on recordTotal trade for the year rose by 12.8% to $215.99 billion from a year ago.

Manufacturing goods, which fell by 10.9% year on year to $4.52 billion, accounted for 80.7% of total exports in December.

Electronic products dropped by 13.9% to $3.17 billion, accounting for more than half of the month’s exports and 69.2% of manufactured goods.

Semiconductors also fell by 12.8% to $4.41 billion for a 42.4% share and accounting for 76% of electronic products.

Meanwhile, imports of raw materials and capital goods, which had a 36.1% share in the total last month, fell by 22% to $3.71 billion. Capital goods dropped by 11.4% to $2.88 billion.

China was the main destination of Philippine-made goods in December that hit $980.84 million, accounting for 17.3% of the total. It was followed by US (14.3%) and Japan (14%).

China was also the main source of imports that month at $2.33 billion (22.7%), followed by Indonesia at 10.4% and Japan at 7.9%.

Aside from weaker global markets, global inflationary pressures had affected the country’s major markets, Cid L. Terosa, a senior economist at the University of Asia and the Pacific, said in an e-mail.

He also attributed last year’s trade deficit to volatile foreign exchange, shaky commodity prices, higher oil prices and weaker global markets. Import growth also dropped due to supply chain and production concerns.

The government should diversity its commodities and markets to cut the trade gap, he said.

Robert Dan J. Roces, chief economist at Security Bank Corp. expects a wide trade gap this year, which would probably put pressure on the peso.

“The base case is for moderating trade performance in 2023 amid elevated inflation and interest rates in the first semester,” he said, citing slowing growth here and overseas.

“However, China’s full reopening by the second half is incrementally good for trade overall but may not be enough to push up full-year growth,” he said in an e-mail. — Bernadette Therese M. Gadon