Trade deficit widens in May with milder growth in exports, imports

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Metro Manila (CNN Philippines, July 9) — The country's trade deficit ballooned anew in May, the Philippine Statistics Authority reported Friday.

Data released by the agency showed that the difference between exports and imports reached -$2.76 billion, expanding by 109.7% from the $1.31 billion deficit logged in May last year.

The PSA noted a 29.8% growth in exports during the month, with total sales of $5.89 billion. The expansion is much slower than the 74.1% increase observed in April.

All export commodity groups saw positive growth rates in May except for machinery and transport equipment. Ignition and other wiring sets led the increase, followed by metal components and refined copper cathodes.

China emerged anew as the country's biggest trading partner in terms of exports this May. The United States came in second, followed by Japan, Hong Kong, and Singapore.

Meanwhile, total imported goods reached $8.65 billion during the month a 47.7% increase. Similar to exports, the recent figure is softer than the 152.8% surge posted in April.

Nine out of ten major import commodity groups expanded in May, led mainly by mineral fuels, iron and steel, and miscellaneous manufactured articles. Cereals, however, registered a negative growth rate.

China was also the country's top supplier of imported goods for the month. Japan, Korea, Indonesia, and the US came after, said the PSA.

Market watchers expressed dismay over the recent figures, especially for exports.

"We had hoped that exports would put in a better show, as the second wave of COVID retreated. The Philippines has lagged behind the regional trade upswing, and these data now leave it further behind still," said Pantheon Macroeconomics senior Asia economist Miguel Chanco in a note.

ING Bank senior economist Nicholas Mapa said separately that exports may have been affected by the lack in shipment options, with domestic exporting companies flagging the difficulty of meeting orders given the shipping industry's bottlenecks during the period.

Along with exports, Mapa said imports "fell modestly below expectations" for the month. Chanco likewise cited the breakdowns on the sector, calling them a "letdown."

"This casts doubt on the government's infrastructure drive, for now, but we still hold out hope on this front, as the "Build, Build, Build" agenda finally is back on the rails," added Chanco about imports' recent performance.