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Friday, March 29, 2024

Exports up by 3% in November, fastest expansion in 10 months

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Exports rose 3 percent in November from a year ago as the government further eased quarantine restrictions and allowed establishments to operate at higher capacity.

Data from the Philippine Statistics Authority showed the pace was the fastest growth in exports in 10 months, or since outbound shipments increased 9.4 percent in January before the government imposed a lockdown to contain the spread of COVID-19.

Exports fell as much as 49.9 percent in April at the height of the lockdown before gradually improving in the succeeding months. Exports rose 2.8 percent in September but fell 1.2 percent in October.

The PSA said merchandise exports amounted to $5.9 billion in November, up from $5.62 billion a year ago. 

Seven of the 10 major commodity groups recorded annual increases led by refined copper, gold and coconut oil. Sales of electronic products grew 4.6 percent to $3.53 billion and accounted for 60.9 percent of the total exports in November.

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Meanwhile, imports tumbled 18.9 percent in November to $7.52 billion from $9.28 billion a year ago, pulled down by lower shipments of transport equipment (-42.7 percent), industrial machinery and equipment (-32.6 percent); and mineral fuels, lubricants and related materials (-30.2 percent).

The value of imports registered a negative annual growth rate for 19 straight months since May 2019. 

The higher exports and lower imports trimmed down the trade deficit in November to $1.73 billion, the smallest in five months.  It was also lower than the $3.65 billion shortfall registered in November 2019.

ING Bank Manila senior economist Nicholas Mapa said the pickup in November exports might have been driven by the strong outbound shipments to China and Taiwan, which bounced back sharply after the COVID-19 challenges in the first half of 2020.  

Mapa said the decline in imports was due to the sharp pullback in economic activity, in particular the lower capital formation represented by the drop in durable equipment/machinery and raw materials used for construction.  

“The current trend of modest gains in exports coupled with weakness in imports will likely continue for at least the first half of the year with the recent spike in COVID-19 cases likely to sap momentum from the recent pickup in global trade, leading to softer export growth,” Mapa said.

Combined exports in the first 11 months of 2020 reached $57.97 billion, down 11.1 percent from $65.18 billion in the same period in 2019. Total imports in the 11-month period also fell 24.5 percent to $77.63 billion from $102.88 billion a year ago.

This resulted in an 11-month trade deficit of $19.66 billion, which was lower than the trade gap of $37.70 billion in the same period in 2019.

The smaller trade deficit in 2020 helped the country post a balance of payments surplus of $11.79 billion as of end-November, data from the Bangko Sentral ng Pilipinas showed.

The Department of Trade and Industry earlier reduced its medium-term export projections from $130 billion set in the Philippine Export Development Plan (PEDP) 2018-2022 to $103.9 billion. The figures include both merchandise and service exports.

“Given that the COVID-19 disrupted several business models, it will be difficult to go achieve our pre-pandemic targets. Hence, we had to adjust our projections based also on the various inputs from industry stakeholders,” said Trade Secretary Ramon Lopez.

Travel goods, garments and wood-based industries were hit the most because of weak global demand and a decrease in production due to COVID-19 restrictions, he said.

Lopez said the new goal was a fighting target for the DTI “given the challenges of the pandemic and the emergence of new strains, and given that this is higher than the $86 billion set by the Development Budget Coordination Committee (DBCC).”

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