Hongkong and Shanghai Banking Corp. said it expects the trade deficit of the Philippines to widen further to $3.719 billion in February from $3.317 billion in January amid surging imports that continue to outpace exports.
The British bank said in a report over the weekend imports growth could accelerate by 16 percent in February, faster than 11.4 percent in January. Exports are forecast to decline 0.5 percent from a 0.5-percent growth in January.
“We expect the trade balance to widen in February as exports decline due to cyclical factors and imports remain elevated to build out the government’s planned infrastructure projects,” HSBC said.
“Imports have been high since the fourth quarter of 2017 due to raw material imports, particularly iron and steel. As a result, the current account deficit was wider than expected in 2017 at 0.8 percent of GDP,” the bank said.
HSBC said the trend would continue with a higher current account deficit forecast this year at 0.9 percent of GDP.
The country’s trade deficit widened 34.4 percent to $3.32 billion in January from $2.47 billion a year ago on surging imports. Merchandise imports jumped 11.4 percent year-on-year to $8.54 billion while exports inched up 0.5 percent to $5.52 billion during the month.
The Bangko Sentral ng Pilipinas reported that the deficit in the current account, one of the main components of the balance of payments, more than doubled to $2.5 billion in 2017 from a $1.2-billion deficit a year ago because of the widening trade-in-goods deficit.
The current account deficit was the biggest since 1999, when the shortfall hit $2.85 billion.
Imports rose 14.2 percent last year, faster than the 12.8-percent rise in exports.
The Bangko Sentral said it was optimistic the current account would return to a surplus in the years ahead especially with the recovery of the Philippines’ main trading partners, particularly the United States.
The balance of payments position in 2017 registered a deficit of $863 million, more than double the $420-million deficit a year ago.
The Bangko Sentral expects the balance of payments to post a surplus of $1 billion in 2018.