Trade deficit widened in February, as exports fell 0.9 percent and imports rose 2.6 percent, data from the Philippine Statistics Authority show.
Merchandise exports declined to $5.18 billion in February from $5.23 billion a year ago, while imports increased to $7.97 billion from $7.76 billion.
The numbers translated into a trade deficit of $2.79 billion in February, wider than the $2.54-billion shortfall registered in the same month last year.
Data showed trade deficit in the first two months hit $6.708 billion, up 16 percent from the $5.763-billion gap in the same period last year.
The PSA linked the drop in exports in February to reduced export sales of metal components (-27.8 percent); gold (-18.4 percent); machinery and transport equipment (-16.7 percent); other manufactured goods (-12.6 percent); and ignition wiring set and other wiring sets used in vehicles, aircrafts and ships (-3.6 percent).
It said the increase in imports was due to the positive growth in transport equipment (up 30 percent); cereals and cereal preparations (28.4 percent); mineral fuels, lubricants and related materials (15.5 percent); other food and live animals (9.6 percent); and telecommunication equipment and electrical machinery (7.6 percent).
ING Bank Manila senior economist Nicholas Mapa said the slowing growth momentum manifested in the latest trade figures.
“Imports continue to grow, albeit at a more subdued pace in 2019 compared to previous years. The fuel import bill has increased but the slowdown in shipments of raw materials and deceleration in capital goods imports reflects slowing growth momentum and should be a cause of concern,” Mapa said in a report.
He said the elevated borrowing after the Bangko Sentral’s aggressive 175-basis-point rate hike salvo last year might be hampering capital expansion while the budget delay, which put government projects on hold, led to the contracted importation of construction material.
“Consumer import growth, outside road vehicles, shows that household spending will likely regain prominence in 2019 now that inflation is firmly within target and falling,” Mapa said.
Outbound shipments remained heavily dependent on the electronics trade which managed to post a meager growth while the rest of the sector struggled.
Mapa said the ongoing trade war between the US and China meant that the Philippine export sector would need to continue to build on sector-changing reforms to help boost productivity.
“Until then, our fundamental view of trade deficits will continue to exert a deprecation bias on the peso but with the slowdown in capital goods and raw material imports, trade deficits may not be as pronounced and current account gaps will likely improve in the coming months,” Mapa said.
Electronic products continued to be the country’s top export in February with total earnings of $2.82 billion. This amount, which accounted for 54.4 percent of the total exports’ revenue during the month, posted an increment of 0.8 percent from $2.8-billion export receipt in the same month last year.