The country’s trade deficit was slashed by almost half last year after global demand for goods weakened amid the coronavirus-induced recession, data from the Philippine Statistics Authority (PSA) showed.
The gap in the trade balance, or the difference between the value of export and import, declined by 46 percent to $21.84 billion in January to December last year from $40.67 billion in the previous year.
The significant reduction in trade deficit was seen after both exports and imports contracted by 10 percent and 23 percent, respectively.
In 2020, total export sales dropped to $63.77 billion from $70.92 billion, while import receipts fell from $111.59 billion to $85.6 billion.
Meanwhile, exports to Japan comprised the highest value amounting to $9.9 billion, or 15.5 percent of the total.
The Japan was followed by the United States with $9.71 billion, People’s Republic of China with $9.59 billion, and Hong Kong with $9.1 billion.
On the other hand, China was the country’s biggest supplier of imported goods valued at $19.85 billion, equivalent to 23.2 percent of the total last year.
Other top importers were Japan with $8.15 billion, South Korea with $6.68 billion, US with $7.63 billion, Indonesia with $5.48 billion and Singapore with $5.38 billion.
In December alone, the country incurred a trade deficit of $2.18 billion, down by 26 percent compared with $2.96 billion a year before.
Exports slightly decreased from $5.75 billion to $5.74 billion, while imports declined by nine percent to $7.92 billion from $8.71 billion in December 2019.
Dutch financial giant ING Bank said the latest trade data highlighted both a fragile global recovery and the ongoing struggles of the local economy.
In a research note posted on its website, ING said these trade trends will likely continue going into 2021 with a fragile global recovery expected to limit any gains for the export sector.
Likewise, ING said that downbeat economic prospects will likely translate to subdued import demand as both firms and households limit investment activity.
“The net effect of these trends will mean that the 2021 trade deficit remains below the pre-COVID-19 level of $3.1 billion, which in turn would be supportive of Philippine peso as corporate demand for the dollar remains soft,” ING said.