By Abigail Marie P. Yraola, Deputy Research Head
The Philippines’ trade deficit in goods narrowed to its two-month low in April, as imports contracted to its lowest in 13 months, the Philippine Statistics Authority reported on Friday.
Preliminary data from the PSA showed the country’s trade-in-goods balance — the difference between the values of exports and imports — reached a deficit of $3.49 billion in April from the $4.51-billion deficit in March and the $4.73 billion gap a year earlier.
It was the slimmest trade gap in two months or since the revised $2.91-billion deficit in February.
The country’s trade balance has been in deficit for nearly a decade or since the $64.95-million surplus recorded in May 2015.
The narrower April deficit was due to a big pullback in imports while exports remained broadly healthy, Pantheon Macroeconomics Chief Emerging Asia Economist Miguel Chanco said in an e-mail adding that this trend in the deficit is encouraging.
“The narrowing trade deficit suggests a more muted demand for dollars as imports contract, which in turn is positive for the peso,” Nicholas Antonio T. Mapa, chief economist at Metropolitan Bank & Trust Co., said in an e-mail.
He added that exports rose on a stark pickup in agro-based exports, in particular outbound shipments of coconut oil and related products while imports slowed due to a contraction in both raw materials and energy imports.
Total outbound sales of Philippine-made goods grew by 7% year on year in April, slower than the 8.7% growth in March and the 28.2% expansion a year earlier.
It was the slowest pace for exports in four months or since the 1.9% decline in December 2024.
By value, April logged the lowest level in three months since the $6.57 billion in January.
Meanwhile, the country’s merchandise imports declined by 7.2% year on year to $10.24 billion in April, a reversal from the 17.8% growth a month earlier and the 28.2% growth in April 2024.
The drop in imports was the sharpest in 13 months or since the 17.6% contraction in March 2024.
The import bill that month, on the other hand, was the smallest amount in two months or since the $9.76 billion in April.
In the first four months, exports grew by 9.5% to $26.87 billion while imports also rose by 5.6% to reach $42.78 billion, way above the government’s revised 6% and 5% growth targets this year for exports and imports, respectively.
This brought the trade deficit to $15.91 billion in the January to April period, smaller than the $15.99-billion gap in the same period last year.
Mr. Chanco said that the continued slowdown in headline export growth, while still robust in the grand scheme of things, was due by a continued moderation in upward momentum to some of the country’s main markets.
“This waning in momentum is coming off a very fast start to the year. In the meantime, demand from China effectively remains missing in action, providing little to no uplift on a month-to-month basis.”
For GlobalSource Partners Country Analyst Diwa C. Guinigundo, it is highly possible there may be frontloading of exports to the United States before the full launch of reciprocal tariffs.
“But that should also have increased imports because most of our major exports are import-dependent. We should be concerned with the weak imports because in a sense imports could be a leading indicator for exports,” he said in a Viber message.
In April, US President Donald J. Trump carried out a 10% blanket tariffs on all its trading partners. However, the plan to impose higher reciprocal tariffs on some countries has been suspended for 90 days or until July.
Mr. Trump imposed a 17% reciprocal tariff in the Philippines, the second lowest among Association of Southeast Asian Nations member countries trailing behind Singapore’s baseline rate of 10%.
‘WEAK’ IMPORTS
Orders of raw materials and intermediate goods in April shrank by 11% to $3.67 billion from $4.12 billion in the same period last year. This accounted for 35.8% of the total April import bill.
Imports of capital goods rose by 6.6% and were valued at $3.28 billion in April while consumer goods inched up by 2.8% to $2.17 billion. These accounted for 32% and 21.2% of the total imports, respectively.
By commodity group, electronic products cornered the largest import value with $2.31 billion, 6% higher than the $2.18 billion in April 2024.
Imports of semiconductors, which accounted for 15.6% of the total electronic products, rose by 9.7% to $1.59 billion.
Additionally, imports of transport equipment jumped by 28.3% to $1.20 billion while mineral fuels, lubricants and related materials plunged by 35.1% to $1.08 billion, accounting 12% of the total.
In April, China remained the main source of imports, accounting 29.4% of the total or $3.01 billion of the total import bill from $3.15 billion a year earlier.
This was followed by South Korea with an 8.6% share or $878.36 million and Japan with 8.3% or $854.85 million.
EXPORTS EASE
In April, outbound shipments of manufactured goods grew by 7.7% year on year to $5.46 billion. This accounted for 81% of the total exports in the country. Exports of agro-based products grew by 15% to $527.67 million.
Electronic products, which made up 50.5% of the manufactured goods and half of the total exports, fell by 4.8% to $3.41 billion from $3.58 billion a year earlier.
From this commodity, about 38.1% of this came from semiconductors, which likewise declined by 6.9% to $2.57 billion.
Meanwhile, exports for other manufactured goods soared 143.8% to $843.60 million while other mineral products inched up by 1.3% to $291.61 million.
The United States was still the main destination of Philippine-made goods in April as exports reached $1.03 billion, accounting for 15.2% of the total exports that month.
Other top export trading partners include Hong Kong, which accounted for 13.6% of the total or $918.74 million and Japan with 13.2% or $893.60 million.
OUTLOOK
Mr. Chanco expects “huge swings” to continue in the next few months due to uncertainties surrounding US tariff policies.
“Two-way trade has been quite lumpy and volatile since the start of the year, flipping between very strong and very weak months since January,” he said.
For Mr. Mapa, he said that capital imports should be monitored for it managed to gain but largely due to an outsized jump in aircraft purchases.
He explained that capital imports measure the investments of both the private and public sector and could point to a renewed build up in potential output that in turn could drive faster economic growth.
“We have not seen game changing reforms or policy developments recently so I don’t think exports and imports will be significantly different from last year,” Mr. Guinigundo said.
He added that with a strong peso, it might weaken export growth and imports could in fact go up for obvious reasons, but these changes have not been observed for now.
“It all boils down to the high cost of doing business in the Philippines—power is expensive, labor cost to many remains uncompetitive given the kind of skills available, and of course the cost of bad governance, corruption if you will.
