Manila, Philippines – The Philippines’ trade deficit swelled in July, the government’s statistics agency reported Tuesday, after exports barely grew during the month while imports continued its accelerated growth pace.
Trade gap in July hit $3.55 billion, wider than $1.31 billion deficit recorded a year ago and June’s $3.19 billion.
Total exports grew by measly 0.3 percent year-on-year to $5.85 billion from $5.83 billion. Exports to Japan, a major trading partner, sagged 18.6 percent.
On the other hand, imports went up 31.6 percent to $9.40 billion on the back of heightened purchases of iron and steel, transport equipment and electronic products, among others.
“As the global trade situation becomes less encouraging, improving the overall climate for export development becomes all the more indispensable,” Socioeconomic Planning Secretary Ernesto Pernia said in a statement.
“Trade war fears have weighed on business sentiment, and we now see softer global activity. With a resolution unlikely in the short term, the dispute is expected to dampen growth in both economies and drag down growth in the wider global economy,” he added.
Philippine President Rodrigo Duterte’s plan to keep his country’s growth engine humming by spending more than P8 trillion on infrastructure has been fueling demand for imports of construction-related goods.
The increasing capital goods imports due to the infrastructure boom have reversed the country’s current account surplus to a deficit, pressuring the Philippine peso.
Government spending on infrastructure and other capital outlays hit P84.5 billion in July, up 17.6 percent from June’s P71.9 billion and 74.6 percent higher than P48.4 billion posted a year ago.
The country’s economic managers have repeatedly said the sustained rise in imports will “support domestic economic expansion.” But in the second quarter of the year, the Philippine economy slowed down to a three-year low of 6 percent as policymakers continue to fight spiraling inflation.