The country's trade gap ballooned in July as imports rebounded sharply from the previous month's decline, while export growth remained sluggish.
Data from the Philippine Statistics Authority (PSA) showed that the trade balance, or the difference between exports and imports, surged 18 percent to $4.87 billion in July from $4.12 billion in the same month last year.
This increase in the trade deficit marked a reversal from the 31 percent contraction recorded a year earlier and was higher than the previous month's increase of 9.8 percent.
The Philippines' trade deficit in July was the largest in 16 months.
The country’s total exports during the month inched up slightly 0.1 percent to $6.248 billion from $6.245 billion in July 2023.
Copper concentrates, other manufactured goods, and coconut oil led the export growth.
In the first seven months, exports were up 2.6 percent compared to the previous year.
Electronic products remained the country's top export, accounting for over half of the total in July.
Manufactured goods continued to be the primary driver of exports, followed by mineral products and agro-based products.
The United States remained the country’s largest buyer of Filipino-made products, followed by Japan, China, Hong Kong, and South Korea.
The majority of Philippine exports went to Asia-Pacific Economic Cooperation (APEC) countries, with East Asia being the largest regional market.
Meanwhile, the country’s import bill surged 7.2 percent to $11.117 billion from $10.37 billion, driven by increased demand for electronic products, iron and steel, and industrial machinery.
Electronic products accounted for the largest increase in imports, followed by iron and steel and industrial machinery.
At end-July, imports were down slightly due to earlier declines.
China continued to be the Philippines' largest source of imports, followed by Indonesia, Japan, South Korea, and the United States.
Michael L. Ricafort, Rizal Commercial Banking Corp. (RCBC) chief economist, said the Philippines may continue to experience a widening trade deficit, driven by factors such as the stronger peso against the US dollar.
Ricafort explained that the appreciation of the local currency has made imports more affordable for businesses while diminishing exports’ competitiveness in international markets.
He also cited the seasonal increase in import activity during the third quarter, which further exacerbated the trade deficit.
Looking ahead, Ricafort noted that potential rate cuts by the Bangko Sentral ng Pilipinas (BSP) and the US Federal Reserve could lower borrowing costs, stimulating greater global investment and economic activity.
“This would help boost global trade/exports/imports and overall economic/GDP [gross domestic product] growth, going forward,” he added.
Additionally, Ricafort pointed out that recent declines in global commodity prices—reaching their lowest levels in two to four years—have made imported goods more attractive to Filipino consumers. (Derco Rosal)