Philippine trade deficit shrank in December

The Philippines’ trade deficit narrowed again in December on the back of robust export sales and a lower import bill, even as political and economic uncertainties persisted at home and abroad.

Latest data from the Philippine Statistics Authority (PSA) showed that the trade-in-goods deficit shrank by 15 percent to $3.52 billion in December. It went down from $4.15 billion in the same month last year.

The full-year shortfall now stands at $49.2 billion.

Yet again, the narrower gap was driven by a jump in exports, while imports remained subdued. Incoming cargo hit a 10-month low that helped offset the overall trade balance.

Jonathan Ravelas, senior adviser at Reyes Tacandong & Co., said the narrowed deficit reflects “two things happening at once.”

“On the export side, growth is being driven by electronics—especially semiconductors—plus better market diversification, which helped cushion the impact of political and global uncertainties,” he said.

“On the import side, the 10-month low points to softer domestic demand, lower global commodity prices and more cautious business spending due to high interest rates and currency pressures,” he added.

For John Paolo Rivera, senior research fellow at Philippine Institute of Development Studies, the trade gap signals resilience.

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”It reflects the resilience of key sectors, notably electronics and selected manufactured goods supported by improving global demand and some peso competitiveness, even as uncertainty persists,” he said.

Rivera echoed Ravelas’ view that record-low imports were linked to softer domestic demand.

”The 10-month low in imports likely stems from a cooling in domestic demand, slower public infrastructure spending and lower global commodity prices,” Rivera added.