Trade deficit widens further in June to $5.8 billion

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Metro Manila (CNN Philippines, August 9) – The country's trade deficit further ballooned in June to $5.84 billion, as imports posted a double-digit growth anew while exports rose by only 1%, according to Philippine Statistics Authority (PSA) figures released Tuesday.

The deficit grew 75.4% annually during the month, quicker than the 74.7% expansion recorded in May. It is the highest tally since the start of the PSA series beginning January 2020.

The country's imports totaled $12.48 billion in June, up 26% year-on-year. This fell behind the 30.2% growth the month prior, where imports were at $11.87 billion.

Minerals fuels, lubricants, and related materials had the highest increase at 125.1%, followed by iron and steel at 34.3% and telecommunication equipment and electrical machinery at 23.1%.

Cereals and cereal preparations, however, logged a 0.7% contraction.

Most of the country's imports came from China, which accounted for $2.55 billion or a fifth of the total. Indonesia came next followed by Japan, South Korea, and Singapore.

Meanwhile, exported goods amounted to $6.64 billion in June. Its growth rate represented a slowdown from May's $5.55 billion.

Other mineral products emerged the strongest performer among export commodity groups, growing 75.8%, followed by coconut oil at 63.2% and chemicals at 31.4%.

Cathodes of refined copper suffered the worst with a 50.1% plunge. Metal components came next at 20.7% and ignition wiring sets at 11%.

The trade deficit stood at $29.79 billion by the end of the first half of 2022, 66% up from the same six-month period last year.

During Tuesday's briefing, National Economic and Development Authority (NEDA) chief Arsenio Balisacan said the deficit's widening is expected.

"With the expansion of exports, usually it takes some lags especially to the extent that imports are in the form of energy and food. But we are also likely to see large importations for construction because we are ramping up and continuing the rapid growth in our construction spending, capital formation," he said.

Still, Balisacan said the country's investments in sectors like transport and connectivity will improve its competitiveness.

A wider trade deficit weighs on the peso as the country needs to buy more dollars to fund its purchase of imported goods, such as oil. This means dollars sent home by overseas Filipinos can buy fewer goods here at home.

The economic manager, however, is optimistic towards the country's foreign exchange prospects.

"As you see, we still continue to have robust remittances. We're ramping up our support to our tourism, which will be a major driver for foreign exchange earnings," said Balisacan.

"Investments, we're counting on the various legislative reforms that the previous administration was able to pass and ramp up the groundwork for making those reforms already available for the business community that should again improve our competitiveness and our export potentials," he added.