Although a double-digit growth in both exports and imports is predicted by the Standard Chartered Bank, it is said that the Philippines would still continue to book a trade deficit next year.
StanChart economist for Asia, Chidu Narayanan said that amidst the export growth in the last quarter of 2017, the country’s trade balance would still be likely to be deficit all throughout 2018.
“We forecast export growth of 12 percent for the year and import growth of 10 percent,”
Meanwhile, PhilStar reports that he also pointed out that the growth in capital goods import will also pick up to 10 percent for next, after staying at a slow pace of 2.5 percent. Which should be partly offset by a slow down of the mineral fuel import growth, which will go down from 31 percent to 12 percent.
The widest trade deficit recorded by the Philippines is in October, which was driven by exports that were lower than expected versus imports that had a sharp increase. The exports increased by 6.6 percent while the imports by 13 percent.
Narayanan explained that the sharp increase in imports was particularly due to semi-processed raw materials, which makes up to 40% of the country’s overall import. This is 22% more than the previously reported record.
Metal imports grew 34% while iron and steel surged up to 57%. But more than these, the import of electronic products made up more than half of all the exports rose 14%.
According to Narayanan, the overall exports growth can be accounted for the contracting exports of apparel and other manufacturers.
He also assured that the dip in the trade deficit should not worry the people because the details reveal a more benign picture.
“Sharp import growth was driven by increased imports of iron and steel, to aid in construction. Indeed, this is a good sign, certainly better than imports being driven by mineral fuels, as has been the case so far this year,”