Philippine April exports rebound slightly; imports drop narrows trade deficit

MANILA, NNA – Philippine exports edged up in April on higher shipments of electronics and bananas, ending five months of declines, but slower global growth amid the U.S.-China trade spat continues to cloud the outlook.

Imports slumped, mainly due to a delay in public works spending, narrowing the country’s trade deficit to $3.5 billion from $3.7 billion a year earlier.

The Philippine Statistics Authority released the latest monthly trade data on Tuesday.

Key points:

-- Exports totaled $5.51 billion in April, a slight increase of 0.4 percent, from the 5.48 billion a year earlier. Electronics, the top export item accounting for 56.7 percent of the total, showed 3 percent growth. Shipments of fresh bananas surged 76.7 percent. Other gainers were gold at 36.1 percent, machinery and transport equipment at 28.5 percent and coconut oil at 18.1 percent.

-- “The improvement in sales and growth in some export items may be attributed to the development of more export markets (both new and existing export markets) as well as improved diplomatic or trade ties,” RCBC economist Michael Ricafort said in an email.

-- Exports to the United States grew 10.6 percent, to China by 20.4 percent, and South Korea by 46.5 percent. The value of U.S.-bound exports was the highest at $906.98 million, accounting for 16.5 percent of the total.

-- Imports fell 1.9 percent to $9.01 billion from $9.18 billion a year earlier. The decline was led by slower sales of raw materials and intermediate goods, down 16.3 percent, and zero growth in capital goods. Growth in consumer goods imports slowed to 7.6 percent from a 20.6-percent rise in March.

-- The slowdown in imports is largely attributed to the decline in government spending on its ambitious infrastructure program, due to the delay in approving the 2019 budget. Slower global growth amid the U.S.-China trade row and uncertainty over Britain’s exit from the European Union are also factors.

Takeaway:

-- Philippine exporters are hoping the recovery in exports continues after the several-month downtrend that began in November due to uncertainty about global trade. “We are hoping the trade war will not worsen somehow, or, if it worsens,that we won’t be very much affected and that we can be beneficiary of that,” Sergio Luis-Ortiz, president and CEO of the Philippines Exporters Confederation, told NNA.

-- However, Ruben Carlo Asuncion, chief economist at the UnionBank, said the slight rebound in exports may be temporary. “[We] still expect exports this year to be soft due to the general trade environment and the general trend in export performance in the last two years," he told NNA.

-- The National Economic Development Authority recognizes the need to drive up exports by increasing market access to Philippine products, implementing reforms to improve productivity, and lowering production costs. It is also calling for passage of reforms that would attract both domestic and foreign investment.

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