Merchandise imports dived 25.8 percent in December 2015 from a year ago, the steepest drop in more than six years, on lower shipment of raw materials and drastic slump in petroleum prices, data from Philippine Statistics Authority showed Wednesday.
Data showed monthly imports fell to $4 billion in December, the lowest in years, from $5.47 billion recorded in the same month in 2014.
The 25.8-percent drop in December 2015 was the steepest in six years, or since the 37.1-percent contraction in April 2009, according to the National Economic and Development Authority.
It halted six consecutive months of growth in imported merchandise. Imports grew 10.1 year-on-year percent in November.
Total imports in 2015 hit $66.7 billion, up 2 percent from $65.4 billion in 2014, while total exports dropped 6 percent to $58.6 billion from $62.1 billion in the same period. This resulted in a trade deficit of $8 billion in 2015, wider than the $3.3-billion deficit in 2014.
Neda said imports were expected to rebound this year. “Despite this decline in December, strong domestic demand will prop up imports growth in the near term, as we expect continued expansion in inward shipments of power-generating machines, office and electronic data processing machines and telecommunications equipment,” said Neda deputy director-general Margarita Songco.
“Investor confidence in the country is still growing and is seen to increase investments. This will in turn boost demand for imports of capital goods as well as raw materials and intermediate goods,” Songco said.
Inbound shipment of raw materials and intermediate goods pulled down total imports bill in December, as it fell 53.2 percent, followed by the 20.3-percent decline in consumer goods.
Neda said imports of materials and accessories for the manufacture of electrical equipment, sourced mainly from Taiwan, Japan and Singapore, dipped 74 percent year-on-year.
This partly mirrors the decline in global electronic and semiconductors sales in December 2015 due to softening global demand which declined 30.3 percent year-on-year to $1.280 billion, Neda said.
ING Bank lead economist Joey Cuyegkeng said the drop in oil prices was another major reason for the steep decline of imports in December.
“The drop in crude oil prices is the major reason for the drop in 2015 imports. But I believe that volumes are higher than in 2014. If we assume that oil prices were steady at 2014 levels, total imports would have grown by around 10 percent,” Cuyegkeng said in an e-mail.
“The normal relationship of weak imports implying a more or less weak economic growth does not hold since 2014. Volumes continue to post encouraging growth rates and outlook,” Cuyegkeng said.
Songco said while domestic demand was expected to drive imports growth in the near term, sluggish global growth remained a downside risk. A downturn in the country’s major trading partners such as Japan and China might drag down imports, particularly intermediate goods used for electronics exports.
“The December results also show that we need to remain vigilant that December outcome could be an indication of possible weakness in the near term,” Cuyegkeng said.