The Philippines’ trade gap widened to nearly $6 billion in July, as electronics imports and exports continued to rise, Philippine Statistics Authority (PSA) data showed.
The country’s trade-in-goods balance — the difference between exports and imports — stood at $5.97-billion deficit in July, rising by 34.9% from the $4.43 billion last year.
Month on month, the trade gap ballooned from the revised $5.5 billion shortfall in June.
July saw the biggest trade deficit in two months or since the $6.1 billion in May.
The country’s trade balance has been in deficit for more than a decade or since the $64.95-million surplus recorded in May 2015.
Imports surged by 19.8% to $14.12 billion in July, from $11.78 billion a year ago. It slipped by 1.4% from $13.32 billion in June.
Merchandise exports jumped by 10.8% to $8.15 billion in July, from $7.36 billion a year ago. Month on month, it slid by 7.7% from $8.83 billion in June.
For the first seven months, the trade deficit ballooned by 29.2% to $37.34 billion, from the $28.91 billion in the same period a year ago.
Exports for the seven-month period rose by 12.9% to $54.92 billion, while imports grew by 18.9% to $92.26 billion as of end-July.
ELECTRONICS
“Electronics remain the heavyweight of Philippine trade, driving both export growth and demand for imported components. The sector is powering export growth, but its heavy reliance on imported components is also widening the trade deficit, with electronic inputs now rivaling oil as a major import item,” Chinabank Research said in a note.
Of total exports, electronic products accounted for 58.8% with $4.79 billion, followed by other manufactured goods with $371.46 million (4.6%), and other mineral products with $366.26 million (4.5%).
Semiconductor exports, which made up more than half of electronic exports, rose by 26.1% to $3.7 billion.
Chinabank noted the electronics sector is still heavily reliant on imports of electronic components, which “highlights an opportunity for the Philippines to deepen domestic electronics manufacturing and capture more value from the sector.”
It noted that risks to the sector’s growth include a new round of semiconductor tariffs from the US government.
“The global AI boom presents an opportunity to deepen local manufacturing and move up the value chain, allowing the Philippines to capture more of the gains for the electronics upcycle,” Chinabank said.
By type of export goods, manufactured goods accounted for 81.1% of the total at $6.61 billion in July. This was followed by mineral products with $776.61 million (9.5%) and agro-products with $548.95 million (6.7%).
“Agricultural exports fell for a second straight month, weighed down by lower shipments of fruits, vegetables, and coconut products. Typhoons and El Niño-induced dry spell pose risks to agricultural output. Mineral exports also declined, particularly copper shipments,” Chinabank said.
The United States was the top destination of Philippine-made goods in July, with $1.68 billion or 20.7% of the total exports.
This was followed by Hong Kong with $1.29 billion (15.9% of the total), China with $919.82 million (11.3%), Japan with $856.6 million (10.5%), and Singapore with $401.17 million (4.9%).
IMPORTS
Meanwhile, electronic products also posted the biggest import value among commodity groups, surpassing imports of energy.
Electronic product imports surged by 61.3% to $4.6 billion in July, making up 32.6% of the country’s bill.
Imports of mineral fuels, lubricants and related materials, which accounted for 13.8% of July imports, also jumped by 34.8% to $1.95 billion mainly due to higher oil prices.
Cid L. Terosa, an associate professor of economics at the University of Asia and the Pacific, said in an email the conflict in the Middle East will likely keep pushing global fuel prices up.
“The combination of a weaker peso and volatility in global oil markets will continue to sustain the higher costs associated with our imports of mineral fuels and lubricants,” he said.
By type of goods, imports of raw materials and intermediate goods accounted for 40.4% of total July imports at $5.71 billion, followed by capital goods with $3.84 billion (27.2%) and consumer goods with $2.58 billion (18.3%).
“Consumer goods imports posted modest growth (+5.5%). Demand for durable goods softened, with motor vehicle imports slowing to +6.2%, while home appliance imports declined for a 10th month. Among non-durable goods, rice imports surged (+65.9%), likely to bolster domestic supply ahead of the anticipated impact of El Niño,” Chinabank said.
China remained the top source of Philippine imports in July with $4.17 billion or 29.5% of the total, followed by South Korea with $1.8 billion (12.7%), Japan with $1.11 billion (7.9%), Indonesia with $807.75 million (5.7%), and the United States with $766.61 million (5.4%). — Pierce Oel A. Montalvo
