PH trade gap upsets record high in November

Rodney N. Artida | January 18, 2018

Photo from EFTA.Int

For Socioeconomic Planning Secretary Ernesto Pernia, the country’s record high trade deficit of $3.78 billion in November last year “was not good, but transitory and manageable” following significant growth on imports according to a Philippine Statistics Authority (PSA) report.

PSA data showed that Exports increased that month by 1.6 percent to $4.96 billion while the imports jumped to 18.5 percent to $8.74 billion.

The trade deficit in November was $25.7 billion, widened by 6.1 percent from $24.23 billion recorded on the same month in 2016.

PSA data showed that exports growth last November was slowest as agro-based products and manufactures recorded declines, which offset the gains in electronic products, cathodes and gold.

The huge deficit can be attributed to Duterte’s infrastructure program which requires a higher amount of imports, which had reversed the current account to a deficit, and in turn had the market worried which weakened the Philippine peso in the recent months.

Paulyn May Ann E. Revillas of Metropolitan Bank & Trust Co. research department said “the expectations of higher imports on the back of the government’s massive infrastructure spending plan this year would still likely to weigh on the peso”

Revillas also projected that the Philippine peso would weaken to P51.75 to a dollar by year-end.

Meanwhile, the NEDA Director-General Pernia explained that the infrastructure program will provide additional stimulus to positive growth aspects as the country’s economy is perceived to carry on its upward trajectory in 2018.

But the NEDA warned the possible surge of domestic interest rates owing to the tax reform law should be monitored closely as it could diminish business and costumer confidence.