By Derco Rosal
After narrowing in August, the country's trade deficit widened again in September as exports fell sharply while imports continued to rise, the Philippine Statistics Authority (PSA) reported.
PSA data showed the trade balance—the difference between exports and imports—increased to a $5.09 billion deficit, representing a 43.4 percent gap, compared to a 7 percent deficit (-$4.39 billion) in August.
September's increase sharply contrasts with the 25.5 percent decrease recorded in the same month last year.
The country's total external trade in goods reached $17.60 billion in September, marking a 3 percent increase from 2023.
Total export sales fell by 7.6 percent year-on-year to $6.26 billion in September, contrasting with the modest 0.3 percent growth in August 2024.
Electronic products led the export decline with a drop of $945.82 million, followed by copper concentrates and refined copper products.
However, for the first nine months of the year, the country's total exports reached $55.67 billion, a 1.1 percent increase compared to the same period in 2023.
Electronic products remained the Philippines' top export, accounting for over half (50.3 percent) of total exports, followed by other manufactured goods and mineral products.
As of August, the United States continued to be the top buyer of Filipino-made products, followed by Hong Kong, Japan, China, and South Korea.
The majority (83.6 percent) of total exports went to Asia-Pacific Economic Cooperation (APEC) countries, with significant shares also going to East Asia and Regional Comprehensive Economic Partnership (RCEP) markets.
Meanwhile, total imports reached $11.34 billion, a 9.9 percent increase from $10.32 billion in the previous year. This continued the 2.9 percent annual rise recorded in August.
This continued rise in import growth is driven by metalliferous ores, electronic products, and food, with significant annual increases.
Electronic products made up the largest portion of the country's imports, followed by mineral fuels and transport equipment.
From January to September, import value rose by 0.6 percent to $95.07 billion, up from $94.49 billion in the same period in 2023.
Electronic products led September imports at $2.40 billion (21.2 percent of the total), followed by mineral fuels at $1.36 billion and transport equipment at $1.12 billion.
Raw materials and intermediate goods made up the largest portion of the country's imports, followed by capital goods and consumer goods.
As of August, China remained the top supplier of Philippine imports, followed by Indonesia, Japan, South Korea, and Thailand.
APEC countries were the largest suppliers of imports, accounting for the majority (84.2 percent) of total imports.
According to Michael Ricafort, chief economist at Rizal Commercial Banking Corp. (RCBC), the stronger peso in September, reaching 55.45 against the US dollar, making imports cheaper, driving faster growth and hitting a 1.5-year high.
"The stronger peso at that time made exports more expensive from the perspective of international buyers, thereby partly slowing down the demand for Philippine exports," Ricafort said.
As a result, the trade deficit grew to its largest in nearly two years, since January 2023, Ricafort added.
However, the peso has weakened against the U.S. dollar since October due to rising geopolitical risks in the Middle East and increased importation ahead of seasonal demand in the fourth quarter, Ricafort noted.
Thus, the peso's recent exchange rate of 58.661 makes imports more expensive for local buyers but makes exports more competitive for foreign buyers, he said.
"In the coming months, increased demand, sales, and other economic or business activities during the Christmas holiday season should help spur more imports, production activities, and export sales," Ricafort said.
He also noted that the expected passage of the CREATE MORE bill is set to attract more foreign investments, support local manufacturing in global supply chains, and boost imports, exports, and global trade.
Additionally, further reductions in U.S. and local interest rates over the next two years would lower borrowing costs, boosting investments, exports, imports, local manufacturing, employment, and economic growth, Ricafort concluded.