$2B TRADE GAP UP 16.5%: Imports rebound, exports drop

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    The country’s imports in February grew for the first time in almost two years, while exports dropped from the year ago level, data released by the Philippine Statistics Authority (PSA) yesterday showed.

    According to the PSA, total imported goods in February 2021, which amounted to $7.6 billion, increased at an annual rate of 2.7 percent.

    The value of imports in February registered an annual growth rate after posting a downward trend from May 2019 to January 2021. The last positive growth rate for imports was recorded in April 2019 at 2.9 percent.

    In January 2021, the annual decline was recorded at 12.1 percent while in February 2020, imports decreased by 7.3 percent annually.

    The country’s total export sales in February 2021 meanwhile, amounting to $5.31 billion, contracted at an annual rate of 2.3 percent, from an annual decrease of 4.8 percent in the previous month. In February 2020, total export sales rose at a rate of 3.4 percent annually.

    The total external trade in goods in February 2021, which amounted to $12.91 billion, grew at an annual rate of 0.6 percent.

    In the previous month, the annual decrease was recorded at 9.4 percent while in February 2020, the decline was slower at 3.1 percent.

    The balance of trade in goods in February amounted to -$2.29 billion, representing a trade deficit with an annual increase of 16.5 percent.

    The trade deficit in the previous month recorded an annual decline of 23.4 percent, while in February 2020, deficit was at -28 percent.

    Karl Kendrick Chua, acting socioeconomic secretary, said in a Viber message to reporters “these are signs of recovery overall,” adding that he hopes this performance will continue in the coming months.

    Nicholas Antonio Mapa, ING Bank Manila senior economist, said in a statement the rebound in imports may be more a result of base effects rather than a true recovery for the sector, with the economy still stuck in recession amid the ongoing quarantines and the recent spike in coronavirus disease 2019 (COVID-19) cases.

    “Inbound shipment of goods and services will continue to expand in the coming months, benefiting from a favorable base and with manufacturers replenishing depleted inventories.

    And although we’ve seen growth in raw materials and capital goods, overall investment activity in the Philippines remains soft with corporates and households postponing expansion activities until the economic outlook improves,” Mapa said.

    “Meanwhile, exports may face some challenges in the near term with global trade expected to take a hit after select countries reinstate lockdowns to deal with spiking COVID-19 cases in their areas. Despite these trends, we expect the trade deficit to remain modest compared to pre-COVID-19 averages which should translate to a current account surplus and near-term support for the peso,” he added.