Trade Balance in Philippines

Philippines - Trade Balance

Export growth moderates in February

Merchandise exports grew 2.8% on an annual basis in February, moderating from January’s revised 9.4% expansion (previously reported: +9.7% year-on-year). Weaker grow was largely the result of a marked slowdown in shipments abroad of electronic products—which account for more than half of total export revenue—while export growth of manufactured goods moderated. On the upside, exports of agricultural products surged to a two-and-a-half-year high in February.

Imports on the other hand fell sharply in February, marking an almost eight-year low (February: -11.6% yoy; January: -2.8% yoy). A broad-based drop across all types of imports underpinned the headline decline: imports of capital goods; consumer goods; mineral fuels and lubricants; and raw materials and intermediate goods all fell in the month.

Accordingly, the merchandise trade deficit narrowed to USD 1.7 billion in February from the USD 2.7 billion shortfall in the same month of 2019 and the USD 3.5 deficit in January.

Dynamics in the external sector are set to reverse moving further into the first half of this year, as the coronavirus pandemic bashes global trade and brings Filipino manufacturing to a halt. Given the rapidly changing outlook for China and the ASEAN region due to the Covid-19 crisis, weakness in the external sector seen last year will likely persist in 2020.

FocusEconomics Consensus Forecast panelists expect exports and imports to grow 2.0% and 5.2% respectively in 2020, with the trade deficit widening to USD 41.3 billion. For 2021, the panel projects exports and imports to grow 6.2% and 8.1%, respectively, and the trade deficit to widen further to USD 46.0 billion.