Philippines External Debt (USD bn)

Merchandise exports decline in January

Merchandise exports dived 13.5% annually in January, on the heels of December’s 7.7% decrease. January’s outturn marked the largest contraction since May 2020. Meanwhile, merchandise imports expanded 3.9% in annual terms in January (December: -9.6% yoy).

As a result, the merchandise trade balance deteriorated from the previous month, recording a USD 5.7 billion shortfall in January (December 2022: USD 4.5 billion deficit; January 2022: USD 4.5 billion deficit). Lastly, the trend pointed down, with the 12-month trailing merchandise trade balance recording a USD 59.5 billion deficit in January, compared to the USD 58.2 billion deficit in December.

Analysts at the EIU commented on the outlook:

“The current-account deficit is likely to narrow in 2023, to the equivalent of 2.9% of GDP, from an estimated 4% of GDP in 2022, as a result of weakening import demand, which will lead to a narrower goods trade deficit. Following the lifting of international travel restrictions in China, services exports in 2023-24 should help the services surplus to reach new highs in nominal terms from 2024.”