Strong jump in imports push trade gap to $1.1B

04/26/2008

The country’s merchandise import bills grew 21.7 percent last February from a year ago to $4.491 billion as a result of increased shipments of electronics and oil products, data released by the National Statistics Office (NSO) showed yesterday.

With the higher import bills, the trade deficit in February went to $379 million, a sharp reversal from the $27-million surplus posted in the same period last year, the NSO statement noted.

Total imports in the first two months of the year rose by 24.9 percent to $9.484 billion. This resulted in a trade deficit of $1.142 billion in January to February, 2008, the statement added.

Analysts, however, said the strong growth in imports was a good sign since the country’s export products primarily electronics are largely dependent on imported raw materials.

Electronic products, including components and semiconductors, made up 41.9 percent of total imports in February, posting a 9.8 percent growth on year to $1.88 billion.

Such components are largely used in the manufacture of electronics which make up the largest sector of the country’s exports.

Mineral fuels and other related products were the second largest import in February with $844.87 million, a 55.6-percent increase over the same period last year.

George Ching of Citiseconline said that the growth in imports of electronics was a good sign, showing that the electronic export sector was still doing well despite signs of a recession in the United States, the country’s main export market.

“Imports for the oil component are pretty much expected but electronics is holding up quite well despite the expected slowdown of the US economy,” he said.

He said the trade deficit was not a concern as the country’s balance of payments remained in surplus with millions of Filipinos working abroad remitting money back home.

“With commodity prices likely to stay elevated and demand for Philippine exports likely to soften, we expect a further narrowing of the country’s current account surplus,” Frederic Neumann, economist at HSBC, said.

Neumann, nevertheless, said imports of consumer goods were surprisingly robust, indicating continued strength in domestic demand.

“Expectations of an imminent slowdown in Philippine growth are therefore misplaced, which implies that inflationary pressures will prove more persistent than the central bank currently expects,” he said.

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