The country’s trade deficit improved in May this year, with imports declining while exports registered sluggish growth, data from the Philippine Statistics Authority (PSA) revealed.

The balance of trade in goods, which quantifies the disparity between the export and import values, narrowed by 21 percent to $4.396 billion in May compared to $5.56 billion in the same month last year.

Despite the decrease, the trade deficit has expanded by 22 percent to $23.99 billion in the first five months compared to a gap of $19.592 billion recorded a year ago.

A trade deficit occurs when the value of the country's imports exceeds the value of its exports. But it is not necessarily a negative indicator of the nation’s economic health as it can be used to meet domestic demand for goods that cannot be produced locally.

Total export sales during the month inched up two percent from $6.32 billion to $6.44 billion.

Electronic products maintained their position as the country’s leading export commodity group, with earnings totaling $3.70 billion, or 57.5 percent of the overall exports.

This was followed by other mineral products, with an export value of $346.60 million, representing 5.4 percent of the total. Additionally, other manufactured goods amounted to $319.59 million, making up five percent.

The People's Republic of China remained the country's primary trading partner, with exports hitting $1.07 billion, accounting for 16.6 percent of the total exports for the month.

China was followed by the United States of America (USA) with exports valued at $1.01 billion, while Japan secured the third position with $930.56 million, and Hong Kong closely in fourth place with $665.00 million.

The Netherlands completed the top five, with exports reaching $346.65 million, making up 5.4 percent of the total during the month.

From January to May 2023, total export earnings reached $28.21 billion, down 11.5 percent from $31.89 billion in the same period last year.

Meanwhile, import receipts totaled $10.84 billion in May, reflecting an eight percent decrease compared to $11.88 billion in the same month last year.

Among the commodity groups, mineral fuels, lubricants, and related materials experienced the largest decline in the value of imported goods, with a decrease of $675.26 million.

It was followed by electronic products, which saw a drop of $580.33 million, and iron and steel, which declined by $164.79 million.

On the other hand, imports of raw materials and intermediate goods accounted for the largest share to the country’s total amounting to $4.05 billion or 37.4 percent.

Imports of capital goods ranked second with a share of $3.16 billion or 29.2 percent, followed by consumer goods with an import value of $2.13 billion or 19.7 percent.

China remained the largest supplier of imported goods in May 2023, accounting for 24 percent of the total valued at $2.60 billion.

Other major import trading partners included Indonesia with $917 million (8.5 percent), Japan with $794.92 million (7.3 percent), USA with $724.44 million (6.7 percent), and South Korea with $712.79 million (6.6 percent).

The cumulative import value for the period from January to May reached $52.20 billion, a decrease of 6.6 percent compared to $55.86 billion in the same period in 2022.