PHL trade deficit widens to $3.25 billion in October from $3.04 billion in September–PSA

AS the country’s trade deficit widened, the country’s reliance on electronic products in boosting external trade performance has increased.

Data released by the Philippine Statistics Authority (PSA) on Tuesday showed the country’s external trade contracted 6.7 percent in October and the country’s trade deficit reached $3.25 billion, narrower than last year but wider than the $3.04 billion in September.

Export growth inched to 0.1 percent, while import growth contracted 10.8 percent in October. Export revenues reached $6.32 billion, while the country’s import bill amounted to $9.57 billion.

“We need to take advantage of the country’s capacities on key products and building skills expertise, and economies of scale to adapt and harness the benefits from emerging technologies like robotics and artificial intelligence,” Socioeconomic Planning Secretary Ernesto M. Pernia said.

“This will also enable the sector to climb a notch in the global value chain and transition into more value-adding and specialized production,” he added.

Data showed that in October, the share of electronic products to total exports reached 56.1 percent, while its share to total imports reached 25.3 percent.

The share of electronic exports to the total has increased this year. In 2018, the share of electronic products to full-year total exports reached 55.1 percent.

Pernia stressed that with this, the country needs to explore alternative production strategies and participate in international trade fairs.

He added that there is also a need to implement consistent branding strategies to increase the presence of Philippine products in the global market.

“A concerted and targeted effort that will have the support of relevant government agencies to fully implement the interconnection should be prioritized to ensure that our exporters are given the necessary platform to remain at par with the rest of the Asean, besides strengthening our integration within Asean,” he added.

Pernia stressed that there is a need to improve competitiveness through the institutionalization of policies and processes that will streamline, facilitate and bring down the cost of doing business.

These, he said, are important factors in making the country more flexible to any eventuality that may impact the economy.

Pernia said there is also a need to focus market strategies toward capitalizing on design-centric and quality-driven products and employing niche marketing should be done for Philippine products to make leave their mark in international markets.

“This only highlights the need for the Philippines to continue to diversify its export products given our continued vulnerability to sharp swings in demand, as well as possible loss of markets owing to probable shifts in the global trade war,” ING Manila Senior Economist Nicholas Antonio T. Mapa told the BusinessMirror via e-mail.

“We will need true reform in this regard with an export road map, coupled with improved logistics and infrastructure to help the Philippines gain a true competitive edge against our peers,” he added.

UnionBank Chief Economist Ruben Carlo O. Asuncion said their outlook amid the 17-month-old US-China trade spat remain cautious. He said this is because of the “fickle nature of the major players, particularly US President Donald J. Trump.”

In 2020, Asuncion said, export performance is expected to stay lackluster under current conditions, such as the absence of a phase 1 deal between the US and China.

“This [dependence on electronics] has always been flagged as a concern and it has already reared its ugly head this year. It is a risk and would not want to downplay it,” Asuncion added.

He also said, however, that one of the factors that could cushion the impact of external risks is the government’s spending, particularly on infrastructure.

He said this assumption is based on expectations that the 2020 budget will be passed on time, as well as the extension of the validity of the 2019 national budget until December 2020.

“It’s impact will be like having a double budget of sort,” Asuncion said.

The National Economic and Development Authority said trade exports benefited from the uptick in earnings from agro-based products, mainly fruits and vegetables; manufactured articles aided in drawing back the previous month’s decline to register a 0.1-percent gain in October 2019.

On the other hand, imports decelerated by 10.8 percent as reduced orders for raw materials  and intermediate goods, capital goods, mineral fuels and consumer goods weakened overall growth of imports.

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