PHILIPPINE EXPORTS are showing signs of recovery, though downside risks remain because of the Chinese economy’s weak performance, Pantheon Macroeconomics said.
“The recovery in Philippine exports is consolidating, but risks remain to the downside in the short run,” it said in its Emerging Asia Monitor on Wednesday.
The Philippine Statistics Authority (PSA) reported that the trade deficit narrowed to $4.13 billion in August, the smallest trade gap in two months.
In the first eight months, the trade deficit narrowed to $36.31 billion from $41.86 billion a year earlier.
Exports rose 4.2% year on year to $6.7 billion in August, a turnaround from the revised 1.7% contraction a year earlier. The August reading was the strongest in nine months.
Pantheon Macroeconomics said that the “nascent recovery in Philippine exports is consolidating.”
“Admittedly, the risks are tilted to the downside in the short run, partly due to China exerting a persistent and material drag in recent months,” it said.
“Moreover, the Philippines’ new export orders sub-index in the manufacturing PMI fell below the 50-mark in September after a strong eight-month spell of growth,” it added.
The research house noted that exports to South Korea are also still “in the red,” which could mean that the signs of recovery could be “short-lived.”
Merchandise imports contracted 13.1% year on year to $10.83 billion in August. This was the highest level since the $10.92 billion total in May.
In the eight months to August, imports declined 9.6% to $84.12 billion.
“Import growth, meanwhile, also beat the consensus in August, as the downturn eased to minus 13.1% year over year, from minus 15.2% in July. But the details show that this improvement says little about a potential turnaround in weak domestic demand; commodity price effects were on full show, driving a near-40% seasonally adjusted monthly leap in imports of commodities and minerals,” Pantheon Macroeconomics said.
“This masked a third straight — and sizeable — drop in capital goods imports and fading upward momentum in consumer goods,” it added.
The government is projecting growth of 1% for exports and 2% for imports this year. — Luisa Maria Jacinta C. Jocson
