PH trade deficit swelled to 6-mo high in March

The Philippines’ trade deficit widened to a six-month high of $4.5 billion in March as soaring global oil prices driven by the Middle East war pushed up import costs despite lower volumes, the Philippine Statistics Authority (PSA) reported on Thursday.

However, the pace of widening stalled at just 0.1 percent year-on-year. John Paolo Rivera, senior research fellow at the Philippine Institute for Development Studies, said this suggests that the impact of the Middle East war on imports remains “contained rather than severe.”

“The surge in exports despite global uncertainty can be explained by resilient demand in key markets, base effects and sector-specific strength, particularly in electronics and manufacturing. Some exporters may also be benefiting from a weaker peso, which improves price competitiveness,” Rivera said.

Data from the PSA showed exports surged 20.4 percent to $6.78 billion, while imports rose 12.3 percent to $11.29 billion. Both were the highest recorded since 1991.

Electronic products remained the country’s top export and import category, accounting for $4.82 billion and $1.14 billion, respectively.

Compared with the previous month, the trade deficit widened by over 12 percent from February’s revised $4 billion level.

The Middle East war erupted in late February and has been escalating since. Peace talks between the United States and Iran appear to be at a deadlock, pushing global oil prices higher anew and threatening to reverse three straight weeks of rollbacks in domestic pump prices.

Mineral fuels surged 35.1 percent in March, which, according to Chinabank Research, was driven by price effects despite a drop in import volumes and is expected to be a key driver of import growth in the months ahead.

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Data earlier obtained by the Inquirer from the Bureau of Customs showed that fuel imports fell 4 percent during the month.

“With no clear resolution to the Middle East conflict in sight, rising crude oil prices are likely to continue pushing up the country’s import bill in the near term, widening the trade deficit. This, however, reflects mainly price effects, as import volumes are expected to continue declining,” Chinabank Research said in a commentary.

On exports, both Rivera and Chinabank economists said strong demand for semiconductors would continue to support external trade and help offset pressure from the high import bill.