Philippines: Merchandise exports rebound to two-and-a-half-year high in December
February 11, 2020
Merchandise export growth soared 21.4% year-on-year in December, sharply rebounding from November’s revised 0.4% decline (previously reported: -0.7% year-on-year). The recovery was driven by a surge in exports of electronic products to a two-year high (December: +24.9% yoy; November: +1.4% yoy)—electronic exports account for more than half of total export revenue— as well as strong growth in shipments of other manufactured goods and agricultural products. The rebound, however, was partly due to a favorable base effect from a steep decline in exports for December 2018—which fell to the lowest level in a single month since April 2016.
Imports on the other hand contracted for the ninth consecutive month in December, albeit at a weaker rate than in November (December: -7.6% yoy; November: -8.0% yoy). The contraction came on the back of plunging imports of raw materials and intermediate goods, while capital goods and consumer goods imports also fell. Conversely, imports of mineral fuels rebounded in the month.
Consequently, the merchandise trade deficit narrowed noticeably to USD 2.5 billion in December from than the USD 4.2 billion shortfall in December 2018 as well as November’s USD 3.3 billion deficit. This marked the best result in the trade balance in six months.
Commenting on their take of December’s result, analysts at Nomura stated:
“Despite the surprise narrowing in the goods trade deficit in December, we maintain our forecast for the current account deficit to widen substantially to 3.2% of GDP this year […] underpinned by stronger domestic demand, particularly higher investment spending which, in turn, is led by a further roll-out of public infrastructure projects. This has been a key driver of import demand in recent years.”