NextGen Day

📉 MANILA – The trade deficit in the Philippines decreased to USD 3.9 billion in June this year, based on data from the Philippine Statistics Authority (PSA).

According to a report published on Tuesday, the PSA revealed that the trade deficit for the month saw a decline of 33.3 percent compared to the USD 5.8 billion recorded in June of the previous year.

The overall external trade in goods amounted to USD 17.32 billion, marking a decrease of 9.6 percent from the USD 19.17 billion registered in June 2022.

Export values saw a modest increase of 0.8 percent, reaching USD 6.70 billion from USD 6.64 billion, largely driven by growth in electronics exports, which saw a rise of USD 421.4 million to USD 3.9 billion.

Key export destinations for the month included the United States, the People’s Republic of China, Hong Kong, Japan, and the Republic of Korea.

On the other hand, total import values contracted by 15.2 percent to USD 10.62 billion from USD 12.52 billion in the same month of the previous year.

The PSA highlighted that the commodity group that exhibited the greatest decline in imported goods was mineral fuels, lubricants, and related materials, reaching USD 1.14 billion. This was followed by electronic products, which dropped by USD 756.53 million, and iron and steel, down by USD 319.04 million.

The PSA stated, “The People’s Republic of China was the country’s biggest supplier of imported goods valued at USD 2.38 billion or 22.4 percent of the country’s total imports in June 2023.”

Other significant sources of imports were Indonesia, Japan, Singapore, and the United States.

Rizal Commercial Banking Corporation (RCBC) Chief Economist Michael Ricafort commented that the narrower trade deficit could lead to mathematically faster economic growth. He added, “This would also somewhat help stabilize the peso exchange rate versus the U.S. dollar, with the corresponding lower requirements to purchase U.S. dollars to finance import payments.”

Ricafort attributed the narrowed trade deficit to lower global crude oil prices in June of this year.

Looking ahead, Ricafort indicated that global trade, including Philippine exports and imports, could rebound after Federal Reserve Chair Jerome Powell recently signaled that the Fed staff are no longer forecasting a US recession.

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