The Philippines posted its biggest trade deficit since data became available, fueled by a rapidly expanding economy.
The trade gap widened to $2.8 billion in May, the Philippine Statistics Authority said in a statement Tuesday. That’s the highest since at least January 1980. The median estimate in a Bloomberg survey of nine economists was for a $1.5-billion shortfall.
Exports rose 14 percent from a year ago to $5.5 billion while imports jumped 17 percent to a record $8.2 billion during the month.
Trade deficit hit $11 billion in the first five months of 2017 and $26.7 billion in 2016, eating into the country’s current account surplus.
Import demand in the Philippines is surging as the government powers ahead with an ambitious infrastructure program, boosting economic growth to more than 6 percent, among the fastest in the world.
As the nation’s current account balance swings from a surplus to a deficit, that’s removing a key support for the currency and the government’s credit rating. With remittances also volatile, the peso has become Asia’s worst-performing currency this year and dropped to its lowest level against the dollar since 2006 on Tuesday.
“The deficit widening is something that’s really consistent with an economy that’s powering ahead and doing very well,” said Euben Paracuelles, an economist at Nomura Holdings Inc. in Singapore.
“The deficit will probably stay large and that would imply more pressures on the currency, more depreciation pressure on the peso over that period,” he said.
The bigger-than-expected trade deficit underscores that the currency’s underperformance this year “is a result of a confirmation of a more challenging current account,” Joey Cuyegkeng, ING Groep NV senior economist in Manila said in note.
Electronics, led by semiconductors, remained the country’s top export product, increasing 18 percent in May from a year ago to $2.8 billion The biggest increases in imports came from metal products, which climbed 44 percent, and transport equipment, which surged 38 percent Biggest growth in imports came from South Korea, Indonesia and Japan.
Data showed total external trade in goods reached $13.731 billion in May, up 15.4 percent from $11.896 billion a year ago.
Socioeconomic Planning Secretary Ernesto Pernia said the country should continue to promote export competitiveness, diversify its products and markets and maximize trade agreements to sustain trade growth for the rest of the year.
“Our country’s trade growth is consistent with the global pick-up. We are striding forward with world trade performers and we intend to match this growth with sound macroeconomic policies,” Pernia said in a statement.
From January to May, total trade increased 13.9 percent to $63.3 billion, with exports and imports growing by 16.3 percent and 12.3 percent, respectively.
“As we aim to diversify our markets, we are pleased to note that our exports to Malta, United Arab Emirates, and India grew significantly,” Pernia said. With Julito G. Rada