The country’s trade deficit widened to a record high of $4.71 billion in November, amid a double-digit hike in imports, data released by the Philippine Statistics Authority (PSA) showed.
According to the PSA, the trade deficit in November was more than the double the year ago level of $2.14 billion. In the previous month, the shortfall was at $4.02 billion.
Michael Ricafort, Rizal Commercial Banking Corp. chief economist, said in an emailed statement the record trade deficit was due to new monthly record high in imports amid measures to further re-open the economy during the month, while exports value slowed to six-month lows but was still among pre-pandemic highs and near record highs.
“The country’s trade deficit for November 2021 is the widest on record on a monthly basis as the economy re-opened further towards greater normalcy during the month with the nationwide adoption of the Alert Level System or smaller scale lockdowns since November 2021 at Alert Level 2 that led to more economic activities,” Ricafort said.
“Increased foreign direct investments and infrastructure spending especially in preparation for the May 2022 elections could have also led to faster growth in imports/wider trade deficit in recent months,” he added.
Imports in November rose by 36.8 percent to $10.98 billion from $8.03 billion a year ago.
“Further re-opening of the economy also increased importation activities and elevated prices of imported global commodities such as oil/energy, among others, that somewhat bloated the country’s import bill,” Ricafort said.
Meanwhile, exports went up 6.6 percent year-on-year to $6.27 billion from $5.88 billion, the lowest in six months.
“However, the recent increase in COVID-19 cases locally and worldwide partly due to the more transmissible Omicron variant that led to some restrictions on mobility could be a drag on economic recovery prospects and also on both export and imports,” Ricafort said.
“Lingering concerns over the Omicron variant could also add to the disruptions in the global supply chains amid isolation and quarantine for increased number of infected workers for many businesses and industries worldwide,” he added.
Ricafort said trade deficit could sustain at the $4 billion levels per month for as long as global oil/commodity prices remain elevated amid continued disruptions in the global supply chains that could be aggravated by the more transmissible Omicron variant.
“Wider trade deficits/net imports also fundamentally led to weaker peso exchange rate versus the US dollar (peso among the weakest in 22 months or since March 2020 recently at 51 levels) with more US dollar purchased to finance increased imports and wider trade deficits in recent months,” Ricafort said.
