Trade deficit swelled to $5.1B in January
The Philippines’ foreign trade deficit swelled in January to post its largest shortfall in three months as imports’ return to growth mode overshadowed the surprise expansion in export sales.
The country opened 2025 with a trade gap of $5.1 billion, 16.9 percent bigger year-on-year, preliminary data from the Philippine Statistics Authority (PSA) showed.
A trade deficit happens when a country spends more dollars to pay for its imports than it earns from exports. Figures from the PSA showed the January shortfall was the biggest since October 2024, when the trade gap stood at $5.81 billion.
Streak snapped
Broken down, exports grew by 6.3 percent to $6.36 billion, snapping four straight months of contraction. This was despite the 2.6-percent contraction in sales of electronic products, the country’s top export.
But notably, outbound shipments to the United States, a major trading partner, expanded by 23.5 percent to $1.13 billion.
Miguel Chanco, economist at Pantheon Macroeconomics, said it remains to be seen if the “punchy” export receipts from the US were a response to the back-to-back tariff threats from US President Donald Trump.
“It would be premature to conclude that this has anything to do with US firms front-loading imports ahead of potential tariff hikes, given that demand from Hong Kong and Japan also began the year with an above-trend jolt,” Chanco said.
Raw materials
Meanwhile, inbound shipments grew by 10.8 percent to $11.45 billion, the largest import bill in almost two years or since March 2023.
There were heightened purchases of raw materials and intermediate goods (+11.8 percent), consumer goods (+13.7 percent) and capital goods (+9.5 percent).
“Unsurprisingly, the gains [in imports] were broad-based,” Chanco said.
“Lumpy capital goods bounced back strongly but their overall trend remains flat, while consumer goods are still broadly rolling over in spite of their January rebound,” he added.
