The country's trade deficit widened to a new record high in November last year as Philippine purchases of goods from abroad accelerated following the further reopening of the economy from quarantine restrictions.

The Philippine Statistics Authority (PSA) reported on Tuesday, Jan. 11, that the country’s trade deficit, or the difference between the value of export and import, reached $4.71 billion in November, more than double than the $2.14 billion seen a year ago.

The November gap also jumped from last October’s $4.02 billion.

Imports that month grew by 37 percent to a new record of $10.98 billion from $8.02 billion a year earlier. Meanwhile, exports increased 6.6 percent year-on-year to $6.27 billion from $5.88 billion.

Purchases of raw materials and intermediate goods accounted for the largest share to the total imports at $4.25 billion, or 38.7 percent of the total, followed by capital goods at $3.35 billion and consumer goods at $1.76 billion.

Michael L. Ricafort, Rizal Commercial Banking Corp. (RCBC) chief economist said the historic high trade deficit was largely due to new record high in imports fueled by reopening of the economy towards greater normalcy.

Exports value slowed to six-month lows in November but still among pre-pandemic highs—since October 2019—and also still near record highs, Ricafort said.

“Trade deficit could sustain at the $4 billion levels per month for as long as global oil/commodity prices remain elevated amid continued disruptions in the global supply chains that could be aggravated by the more transmissible Omicron variant,” Ricafort said.

However, he said the recent increase in COVID-19 cases that led to some movement restrictions could be a drag on economic recovery prospects and also on both export and imports.

“Lingering concerns over the Omicron variant could also add to the disruptions in the global supply chains amid isolation and quarantine for increased number of infected workers for many businesses and industries worldwide,” the RCBC economist said.

Meanwhile, Nicholas Mapa, ING Bank senior economist said that one of the major factors for the stark widening of the trade gap was higher fuel imports.

“Costlier imported crude oil translated to overall fuel imports rising sharply, which in turn helped bloat the trade deficit to its current record high,” Mapa said.

"With global crude oil prices staying elevated to open the year, the Philippines could continue to experience wider trade deficits in the near term,” he added.