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January exports shrink as recession bites

Philippine exports shrank in January after rising in the previous two months, while imports continued to decline for the 21st month, the Philippine Statistics Authority (PSA) said on Friday.

Merchandise exports shrank by 5.2% to $5.49 billion in January from 9.4% growth a year earlier, according to preliminary data. Exports grew by 1.7% in December.

Imports also fell by 14.9% to $7.911 billion in January, worse than the declines of 8.2% and 2.8% in December and January 2020, respectively.

These figures were below the Development Budget Coordination Committee’s growth targets of 5% and 8% for exports and imports this year.

The latest trade figures brought the trade balance to a $2.421-billion deficit in January, wider than the $2.149-billion gap in December, but narrower than the $3.504-billion shortfall in January last year.

Total external trade in goods for the year — the sum of exports and imports — shrank by 11.1% to $13.401 billion.

Export sales growth for manufactured goods, which made up 85.7% of the total in January, was flat at 0.02% to P4.704 billion.

Exports of electronic products, which accounted for 59.1% of the total, inched up by 0.3% to $3.244 billion. This was despite a 4.4% drop in semiconductors, which made up almost three-quarters of electronic products,
Agriculture-based exports slumped by 22.7% to $332.56 million versus $430.12 million a year earlier.

Meanwhile, imported raw materials and intermediate goods declined by 9.2% to $3.197 billion. These made up 40.4% of total imports.

Capital goods, which accounted for a third of January imports, fell by 14.8% to $2.590 billion from a year earlier. Imports of mineral fuels, lubricant and related materials dropped by a third to$681.74 million.

Nicholas Antonio T. Mapa, senior economist at ING Bank NV Manila Branch, described the country’s trade performance as “more of the same,” with the economy stuck in a recession.

“The poor showing of exports related to food manufactures is tied to recent storm damage that hurt crop production” that weighed on economic growth in the fourth quarter, he said in an e-mailed note.

The Philippine economy shrank by 9.5% last year amid a coronavirus pandemic, the worst since World War II.
“The ongoing slump in imports suggests that growth pains for the Philippines will be around for some time,” Mr. Mapa said.

A potential pickup in consumer goods might signal a rebound in domestic activity, Milo Gunasinghe, a research analyst at JPMorgan, said in a separate note.

”The January print suggests such a trend has yet to materialize and supports our narrative of a fragile economic recovery ahead,” he said.

A “substantive widening” of the trade deficit is expected up too the second half given the country’s fragile recovery, he added.

Trade could still turn around as more people get vaccinated against the coronavirus. Philippine Exporters Confederation, Inc. President Sergio R. Ortiz-Luis, Jr. said by telephone.

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