The Philippines’ Dest-in-goods Deficit will disappear by 2024, the largest trade gap in more than two years as imports have taken over while export sales have continued to decline, the Philippine Statistics Authority (PSA) said on Friday.
The first data from the PSA showed the country’s full trade balance – between export and import values - increased by 20% year-on-year in 2024 and gaps in 2024 last year.
The latest figures marked the lowest trade gap since the $57.65-billion deficit in 2022.
Commercial exports in 2024 declined by 0.5% to $73.21 billion, below the 4% growth target set by the development budget and coordination committees (DBCC) in 2024.
Last year, exports fell by 7.5%.
Currently, the import rises by 1% year-on-year to $ 127.43 billion in 2024, assuming an emergence of 8% in 2023. Import growth missed the DBCC target of 2%.
In December, the deficit of the national goods made by the country was reduced to $ 4.14 billion from Refment $ 4.85 billion Deficit in November.
This was the smallest trade segment in nine months or from the $3.35 billion deficit in March 2024.
Merchandise exports for the month fell by 2.2% to $5.66 billion, less than the 8.6% activity in November.
In terms of value, export earnings in December were the lowest in six months or from $5.57 billion in 2024.
Similarly, import contracted by 1.7% to $ 9.79 billion, slightly less than the 4.1% decrease last month.
The import value was the lowest in nine months or since $9.57 billion in March 2024.
“A few years ago, both exports and imports were very weak and did not contribute to economic growth,” said Diwa C. Guinigundo, country analyst at GlobalSOURSUPTION.
Mr. Guinigundo added that with Net Net, foreign trade has less impact on the economy.
“Weak exports are underpinned by higher imports even as they have been quite sluggish recently, [while] Modest imports also reflect weak manufacturing and business activities,” Mr. Guinigundo said in a Viber message.
In addition, he noted that in the last two years, the Philippine economy saw a slowdown, falling behind the low end of growth targets.
In 2023, the Philippine economy grew by 5.5%, much slower than the 7.6% increase in 2022.
This was the weakest growth in three years since the 9.5% slump in 2020.
PSA will report the fourth quarter and full gross domestic product in Jan. 30, Thursday.
Manufactured goods, which account for three-thirds of exports, fell 2.6% to $58.34 billion last year.
Electronic products, the most manufactured goods and more than half of all shipping items, changed by 6.7% to $39.08 billion. Semiconductors also fell by 13.5% to $29.16 billion.
The United States remained the top destination for Philippine goods in 2024, with sales amounting to $12.12 billion or 16.6% of export sales.
It was followed by Japan with $ 10.33 billion (14.1% Share), Hong Kong with $ 9.1% billion (13.9% billion (4.9% billion (4.9%).
Imports of capital goods decreased by 0.1% to $ 35.7 billion.
On the other hand, the import of agricultural goods and intermediate goods increased by 2% to $ 46.35 billion.
The import of consumer goods also increased by 5.6% to $ 25.81 billion, while the import of minerals, lubricants and related materials declined by $ 19.06 billion.
By Commodity Group, electronic products had the highest import value of $27.37 billion in 2024, up 2.7% from $26.64 billion last year.
China was the largest source of imports in the year with $ 32.81 billion worth of goods, accounting for 25.8% of the Import Bill.
It was followed by Indonesia with $10.55 billion (8.3% share), Japan with $10.07 billion (7.6% billion (7.6%)) and the United States (6.4% Billion (6.4%).
Jesus L. Trarnza, chairman of the Federation of Philippine Industries, said in a telephone call that illegal trade and the importation of consumer goods such as rice and sugar contributed to the expansion of the annual gap.
He also added that the increase in smuggling in the country has led to a decrease in domestic production.
“The President would like to strengthen the price of rice, the price of sugar … There is our desire, too, to lower prices for consumers. Because consumers are already making noise,” he said in a mixture of Tagalog and English.
Mr. Arranza also said that the reduction in the gap in December was due to the period already made during the period of October-November, the end of the period is expected.
Mr. Guinigundo said that it is correct that the increase in US tariffs will not be applied to Philippine exports, it would affect Philippine exports to China, which is participating in the Southeast Asian semiconductor market.
“This may require a re-examination of Philippine retailers in their market focus,” said Mr. Guiinigundo. – Pierce Oel A. Montalvo
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