Exports spur Philippine foreign trade rebound

The country´s trade-in-goods deficit narrowed in March as exports grew at the fastest pace in a decade, the Philippine Statistics Authority reported on Friday.

Merchandise exports avanced by 31.6% to $6.68 billion after dropping by 1.5% in February, according to preliminary data.

The export tally for March was bigger than $5.35 billion a month earlier and $5.08 a year ago.

Meanwhile, merchandise imports expanded by 16.6% to $9.10 billion in March, higher than the 8.9% growth in the previous month.

March export growth was the fastest since 46.8% in September 2010, while import growth was the fastest since 26.2% in October 2018.

This brought the trade deficit to $2.41 billion in March, smaller than the $2.71-billion gap in February, as well as the $2.73-billion shortfall in March last year.  

Year to date, exports have increased by 7.6% to $17.56 billion compared with the Development Budget Coordination Committee’s (DBCC) projection of a 5% growth for the year.

Imports also have grown by 3.2% to $25.56 billion this year from $24.76 billion a year earlier. This was still below DBCC’s 8% target this year.

To date, the trade balance has hit an $8-billion deficit, narrower than last year’s deficit of $8.45 billion.

Ruben Carlo O. Asuncion, chief economist at UnionBank of the Philippines, Inc. traced the numbers to base effects.

“The reopening of the economy in these first months of 2021 was also a clear factor as more people were out and businesses were open for more economic activity,” he said in an e-mail. “Corporate demand for imports and other inputs was also observed during this first quarter,”

Nicholas Antonio T. Mapa, a senior economist atING Bank N.V. Manila, cited the “strong showing” of the mainstay electronics sector in driving export growth this year.

“Demand for electronics and subcomponents will likely remain high given the global chip shortage — a development that could bode well for this sector in the coming months,” he said.

Danilo C. Lachica, president of the Semiconductor and Electronics Industries in the Philippines, Inc. said global demand for electronic products has continued to increase despite a global coronavirus pandemic.

“The electronics industry directly accounts for about 10% of the country’s gross domestic product,” he said  In an e-mail. “If we consider the secondary effects of the industry’s supply chain, the total impact is about 20% of our GDP.”

Electronic products, which made up more than half of total exports in March, increased by a quarter to $3.60 billion.  Semiconductors, which account for more than three-fourths of electronic products, also grew by 21.3% to $2.73 billion.

Manufactured goods, which include electronic products, rose by 36.3% year on year to $5.57 billion. These items made up 83.3% of total goods exported during the month.

“We expect the base effect-induced expansion for both exports and imports to continue in the coming months, with the Philippine economy relatively more open in 2021 compared with last year,” Mr. Mapa said.

“Demand for electronics components given the global chip shortage may also help lift demand for the export sector,” he added.

UnionBank’s Mr. Asuncion said the state´s ability to hit export and import targets would depend on a bigger reopening of the economy, more fiscal stimulus spending and an efficient vaccination program.

He added that the March trade figures bode well for first-quarter economic performance, but it may not be enough to push growth.

The trade momentum would likely have been sustained in April, though imports probably softened after a tighter lockdown, Robert Dan J. Roces, chief economist at Security Bank Corp. said in an e-mail.

Rising imports after the economy is reopened would boost the trade deficit and likely lead to a weaker peso, he said. “We think that the government targets this year for exports and imports at 5% and 8% are attainable.” — Lourdes O. Pilar

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