Exports and imports rose at a double-digit rate for the third straight month due to the gradual opening of major economies and improving manufacturing sector, data from the Philippine Statistics Authority show.
The PSA said merchandise exports grew 29.8 percent in May to $5.89 billion from $4.54 billion a year ago while imports jumped 47.7 percent to $8.64 billion from $5.86 billion. This followed the 74.1-percent increase in exports and 152.8-percent rise in imports in April.
This resulted in a trade deficit of $2.75 billion in May, up by 109.7 percent from $1.3-billion shortfall a year ago.
“We are very optimistic that we can sustain this upward exports performance trajectory as our major trading partners continue opening up their borders and easing travel restrictions, given the success rate in their vaccination drive The same thing here in the country as we rollout the vaccination program and allowed 100-percent operating capacity even during the Enhanced Community Quarantine and Modified ECQ months of March and April of this year,” Trade Secretary Ramon Lopez said in a statement.
Electronic exports continued to be the Philippines’ top exports with a 61.3-percent share of the total, growing by a hefty 22.3 percent. The fastest growing sectors were medical/industrial instruments (up 240 percent) consumer electronics (216.2 percent) and office equipment (120.5 percent). Semiconductors managed to grow 11.3 percent to $2.53 billion.
Non-electronics products that performed beyond expectations were travel goods and handbags (up 884.1 percent), Christmas décor (433.6 percent), Basketworks (380.7 percent), ceramic tiles (420.8 percent) and fine jewelry (390.7 percent).
Lopez said this is an indication of the gradual recovery of the consumer market as more people resumed their lives interrupted by the pandemic. Total non-electronics exports expanded 20 percent from a year earlier.
“As we focus our efforts on the key export sectors of our country, we hope to regain our lost opportunities due to the COVID-19 pandemic and maintain the momentum of accelerating our export growth,” Lopez said.
Global trade is expected to further rebound in the second quarter according to UNCTAD’s outlook for 2021, largely dependent on subsiding pandemic restrictions.
The UN agency expects the fiscal stimulus packages, particularly in developed countries, to strongly support the global trade recovery throughout 2021. Sectors expected to maintain growth include pharmaceuticals, communication and office equipment, minerals and agri-food.
Cumulative export earnings in the first five months climbed 21.4 percent to $29.35 billion while total imports grew by 27.6 percent to $43.5 billion. Trade deficit in the five-month period amounted to $14.18 billion.
ING Bank Manila senior economist Nicholas Mapa said the widening of the trade deficit heaped more pressure on the Philippine peso to weaken amid the broad dollar strength. The peso breached the 50 per dollar level to close at 50.08 against the greenback Friday.
“Both exports and imports fell modestly below expectations but the trade deficit widened past forecast to settle at $2.8 billion,” Mapa said.
“Exports may have been hampered by the lack of shipment options as local exporting firms have complained about the difficulty of fulfilling orders due to bottlenecks in the shipping industry,” Mapa said.
Michael Ricafort, chief economist of Rizal Commercial Banking Corp., said additional measures to further re-open the economy from lockdowns would lead to some pickup in business/economic activities, including manufacturing that could also fundamentally lead to some pickup in both exports and imports.
“For the coming months, further pickup in imports and exports would be a function of more COVID-19 vaccine arrivals as well as the inclusion of economic frontiers or A4 [economic frontliners] and A5 [indigents] priority groups in the vaccination program that would help shore up confidence by both businesses and consumers,” he said.
Ricafort said this would help sustain the recovery prospects for many businesses, especially as exports moved closer to record highs despite the COVID-19 pandemic and imports moved closer to pre-COVID levels.