Soaring imports and sluggish exports widened the country’s trade deficit to $3.55 billion in July and $22.49 billion in the first seven months, data from the Philippine Statistics Authority show.
The PSA said merchandise imports jumped 31.6 percent in July to hit $9.4 billion from $7.14 billion a year ago. Exports grew by only 0.3 percent to $5.85 billion in July from $5.83 billion in the same period last year.
This widened the July trade deficit by 171 percent to $3.55 billion from $1.31-billion shortfall a year earlier. The trade deficit in January to July also hit $22.49 billion, significantly higher than $13.055-billion a year ago.
The widening trade deficit was blamed for the country’s deteriorating balance of payments and the depreciation of the peso against the US dollar.
Economic Planning Secretary and National Economic and Development Authority director-general Ernesto Pernia cited the need for exports to catch up with imports growth.
“As the global trade situation becomes less encouraging, improving the overall climate for export development becomes all the more indispensable. Thus, the government needs to fast-track the crafting of the Ease of Doing Business Act’s implementing rules and regulations,” Pernia said in a statement.
Data showed that total merchandise trade reached almost $100 billion in seven months, or 7.7 percent higher than the same period in 2017. This can be attributed to the 15.7-percent cumulative growth in imports, making up 61.2 percent of total trade, Pernia said.
Merchandise imports grew by nearly a third in July, driven by import of capital goods, raw materials and intermediate goods, which posted hefty growth, indicating continuing investment for higher productivity.
Exports continued its recovery, albeit minimally, as forest and mineral products propped up total exports growth.
Pernia said the World Trade Outlook Indicator pointed toward a continued slowdown in trade in the third quarter. The slowdown in activity was attributed to rising trade barriers, moderating growth in China, higher energy prices, and elevated policy uncertainty.
He said the bilateral trade war between the US and China resulted in a growing coverage of tariff levies throughout the year, with both countries already imposing additional 25 percent tariff on $50 billion worth of goods each.
“Trade war fears have weighed on business sentiment, and we now see softer global activity. With a resolution unlikely in the short term, the dispute is expected to dampen growth in both economies and drag down growth in the wider global economy,” he said.
Pernia said to boost exports,there was a need to promote forward and backward linkages. This is through projects such as the Agribusiness Support for Promotion and Investment in Regional Expositions, which integrates marketing development support services to farmers, fisherfolk and MSMEs, and linking exporters to sources of export financing.
He said the high cost of domestic and international shipping and cargo handling also needed to be addressed.
“Addressing costs of trade will ensure that imported goods, especially capital and intermediate products, are less expensive and are efficiently utilized in the country’s ‘Build, Build, Build’ program,” he said.
The country’s trade deficit went up by 15.9 percent to $41.5 billion in 2017, as the growth in imports of goods of 14.2 percent outpaced that of exports of goods at 12.8 percent.
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