The ocean and the beach in the Philippines

Philippines Trade Balance December 2021

Philippines: Merchandise exports increase at a faster rate in December

Merchandise exports increased by 7.1% on an annual basis in December, on the heels of November’s 6.6% jump. Meanwhile, merchandise imports skyrocketed 38.3% over the same month last year in December (November: +36.8% yoy).

As a result, the merchandise trade balance deteriorated from the previous month, recording a USD 5.2 billion deficit in December (November 2021: USD 4.7 billion deficit; December 2020: USD 2.4 billion deficit). December’s print meant that the trade deficit for the year of 2021 as a whole hit USD 41.1 billion, a significant worsening from 2020’s deficit of USD 24.6 billion.

Nomura’s Euben Paracuelles and Rangga Cipta commented on the reading:

“The Philippines’ trade deficit expanded to a new record high […], as import growth continued to outpace exports, led by raw materials and vaccines, even as net electronics exports (i.e. less imported inputs) improved. The terms-of-trade effects also contributed significantly to the [larger trade deficit], as we have flagged before, with imports of petroleum and coal picking up sharply in the Philippines, reflecting higher prices.”

While ANZ’s Debalika Sarkar and Sanjay Mathur argue the print is symptomatic of an imbalanced recovery:

“The unanticipated strong rebound in Philippine economic activity is welcome. At the same time, it is uneven, with domestic demand surging and the contribution from external trade concomitantly dwindling. This lopsided pattern of growth is also mirrored in the recent widening of the trade and current account deficits.”

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