The Philippines recorded its widest trade deficit in more than two years in October 2024, as imports surged while exports contracted versus the previous year’s level, according to the Philippine Statistics Authority (PSA).
The PSA reported yesterday the country’s balance of trade in goods registered a deficit of $5.8 billion in October, reflecting a 36.8- percent increase compared to the same month last year.
The latest trade deficit level is the widest since August 2022’s deficit of $5.99 billion.
The trade performance for the month was impacted by various factors, such as global economic uncertainties, domestic policy shifts and seasonal demand.
The total imported goods in October 2024 saw a year-on-year increase of 11.2 percent, to $11.96 billion, the highest recorded in two years.
Total export sales in October fell 5.5 percent to a four-month low of $6.16 billion.
Michael Ricafort, chief economist for the Treasury Group of Rizal Commercial Banking Corp., cited the geopolitical risks during the month in view of the second Iranian missile attack on Israel that could have led to the hedging of importation of oil and other major global commodities.
He added the markets also priced in the possibility of a Trump victory in the US presidential election that led to a stronger US dollar and prompted some hedging of imports.
“Imports continued to increase as part of the preparations for the seasonal increase in demand/sales in December or during the Christmas holiday spending for many businesses and industries,” Ricafort also said.
“Exports remained relatively softer due to mostly weaker economic data recently in China, which is the world’s second largest economy and among the biggest trading partners of the Philippines,” he added.
Ricafort said the stronger peso exchange rate versus the US dollar in October made exports more expensive for international buyers, while making imports cheaper from the point of view of local buyers, partly increasing demand for imports.
Rice imports also increased amid reduced tariffs on imported rice, as well as due to the recent decline in world rough rice prices to among 2.5-year lows, Ricafort said.
He added the spread of African swine fever to more provinces reduced local meat output, thereby necessitating increased imports of meat to increase local supplies and help stabilize local prices. “Going forward, any protectionist policies by US President-elect Trump could lead to higher US import tariffs, retaliatory tariffs/trade war that could lead to higher US inflation that, in turn, could lead to fewer future Fed rate cuts and could slow down global trade and also slow down world economic growth,” Ricafort said.
