Philippine exports rose in February on rising global demand

By Lords and Pillars, Researcher

The country’s trade deficit narrowed in February as exports grew at the fastest pace in six months due to strong demand, while import growth slowed.

February merchandise export receipts rose 15% year-on-year to $ 6.159 billion, preliminary data from the Philippine Statistics Authority showed Friday.

It was picked from a turnaround from a 9% increase revised the previous month and a 1.4% decline in February last year. Export growth that month was the fastest in six months or after the 18.9% expansion in August.

The value of outbound shipments of goods in February reached a two-month high or $ 6.279 billion in December last year.

Meanwhile, the country’s merchandise import bill rose 20.1% to $ 9.688 billion in February, easing from a revised 27.7% pace in the previous month.

This is the slowest import growth in 12 months since the 9% growth recorded in February last year.

February imports hit a nine-month low or মে 9.122 billion since May last year.

This brings the trade deficit to $ 3.529 billion in February, more than the 70 2.707-billion deficit recorded in the same month last year, but less than the $ 4.716-billion gap in January.

It was the smallest trade deficit in six months or 3.5 3.522 billion since August 2021.

To date, the trade balance has reached a $ 8.245-billion deficit compared to last year’s $ 5.586-billion trade gap.

For two months, exports rose 11.9% year on year to $ 12.205 billion. This is beyond the 6% growth projected by the Development Budget Coordinating Committee for this year.

Imports, on the other hand, rose 24% to $ 20.450 billion, surpassing the government’s 10% target in 2022 already.

“Our previous efforts to ensure 100% management capacity for the export sector have enabled the sector to meet the growing global demand. In addition to increasing momentum, we continue to develop more export champions, ”said Commerce Secretary Ramon M. Lopez in a statement.

Outbound shipments of manufactured goods constitute bulk – 81.7% of total exports in February. Its value rose 10.6% year on year to 5.029 billion.

Electronic goods, which accounted for more than half of total production and exports that month, rose 15.1% to $ 3.444 billion. Three-quarters of electronics sales came from semiconductors, which rose 20.4% to $ 2.595 billion in February.

Orders for the country’s raw materials and intermediate goods, meanwhile, accounted for 37.7% of the total import bill in February. That’s $ 3.649 billion, an increase of 14.3% year-over-year.

The value of imports of capital and consumer goods in February was $ 2.806 billion (up 3.6%) and $ 1.488 billion (8.4% higher).

Analysts say the rise in exports in February reflects improved global demand as many economies begin to lift epidemic restrictions.

“The resurgence of global demand for semiconductor and electronics products has also pushed exports significantly,” said CID L.A., a senior economist at the University of Asia and the Pacific (UANDP). Terosa said in an e-mail

Mr Terosa added that the geopolitical conflict between Russia and Ukraine had wreaked havoc on world markets in February and had led to a month-on-month drop in total trade. On February 24, Russia invaded Ukraine.

“Although year-on-year total trade in February 2022 was still a significant improvement over the previous year, it was slower than year-over-year growth in January 2022,” he added.

Total trade – or the sum of good exports and imports – fell 5.7% month-on-month to $ 15.847 billion in February. On an annualized basis, it jumped 18.1%.

The ongoing Russia-Ukraine war is affecting global commodity markets and logistics, which could lead to stagnant growth in exports and imports.

Since the attack, global crude oil prices have risen to a multi-year high above $ 100 a barrel in late February as Russia, the world’s second-largest producer of commodities amid supply concerns.

“Export growth has increased due to greater global demand. Imports have declined since the start of the war in Eastern Europe due to disruptions in the global supply chain and the relatively slow growth of goods imported into the Philippines, ”said John Paolo Rivera, an economist at the Asian Institute of Management, in an e-mail.

“Developed world market conditions have strengthened exports [in February]Sergio R., president of the Philippine Exporters Confederation, Inc. (Flexport). Ortiz-Lewis, Jr. said in a phone interview on Friday

The United States, which accounted for 15.7% (or 966.66 million) of total receipts, was the top export destination in February. It is followed by Japan (14.6%) and China (13.1%).

China, meanwhile, was the country’s main source of imports in February, accounting for 18.3% of total bills (or 7 1.772 billion), followed by South Korea (10.8%) and Japan (9.4%).

Disruption has been observed

But as world trade begins to improve as many economies reopen, the ongoing conflict between Russia and Ukraine could weaken it in the medium term, analysts say.

“While the momentum continues, the war in Eastern Europe has suddenly hampered the recovery of trade performance. Therefore, the full potential of recovery cannot be exploited, “said Mr. Rivera of AIM.

“Trade is not growing as fast as loose epidemic restrictions should,” he added.

Mr Ortiz-Lewis of Felixport said government trade targets would be unfulfilled this year, especially with export growth, as the sector was affected by the epidemic.

“I’m not sure if we will be able to meet DBCC’s export targets by 2022 … Exports were affected by the epidemic, I don’t think we will achieve that target, probably not by 2023,” he said.

Mr. Terosa of UA & P expects that trade efficiency will continue to decline in March, month-on-month and year-over-year.

“I hope that the trade gap will widen further as the prices of petroleum products continue to remain high before the start of the Russia-Ukraine conflict in late February,” he said.

“It will be difficult to participate positively in the global market if everyone’s attention is focused on securing the internal supply of essential commodities,” he said.

“Achieving import and export targets will be difficult [this year] If geopolitical tensions between Russia and Ukraine go out, “said Mr Terosa.

“Also, the lockdown in China could play a role in stifling trade. As the Philippines is a small player in the world market, it has no choice but to withstand the blows of external forces by suppressing the larger export and import flows, ”he added.