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Philippines Trade Balance December 2020

Philippines: Merchandise exports swing into contraction in the last month of 2020

Merchandise exports dropped 0.2% in annual terms in December, contrasting November’s 4.0% growth. December’s downturn was largely attributed to plunging shipments of cathodes and refined copper, as well as of machinery and transport equipment. Meanwhile, merchandise imports dropped at a softer—albeit still pronounced—pace of 9.1% (November: -18.3% yoy).

As a result, the merchandise trade balance logged a USD 2.2 billion deficit in December, which was narrower shortfall than the USD 3.0 billion deficit in the same month of 2019 but wider than the USD 1.7 billion deficit in November. Lastly, the trend improved, with the 12-month trailing merchandise trade balance recording a USD 21.8 billion shortfall in December, compared to the USD 22.6 billion deficit in November.

Commenting on the trade outlook and its likely impact on the PHP, Nicholas Mapa, senior economist at ING, noted:

“Trade trends will likely continue going into 2021 with a fragile global recovery expected to limit particular gains for the export sector while downbeat economic prospects will likely translate to subdued import demand as both firms and households limit investment activity. The net effect of these trends will mean that the 2021 trade deficit remains below the pre-Covid-19 level of $3.1bn, which in turn would be supportive of PHP as corporate demand for the dollar remains soft.”

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