Trade deficit widened by 35% in July 

Philippine trade deficit widened in July as heavy reliance on imported electronic components continued to outweigh gains from robust electronics exports.

Data released Friday by the Philippine Statistics Authority showed the trade gap expanded by 34.9 percent year-on-year to $5.97 billion.

From January to July, the trade deficit stood at $37.34 billion, 29 percent wider than a year earlier.

In a commentary, Chinabank Research said electronic products continued to drive Philippine trade in both directions, boosting exports while also fueling demand for imported components.

“The sector is powering export growth, but its heavy reliance on imported components is also widening the trade deficit, with electronic inputs now rivaling oil as a major import item,” Chinabank economists said.

“The global AI (artificial intelligence) boom presents an opportunity to deepen local manufacturing and move up the value chain, allowing the Philippines to capture more of the gains from the electronics upcycle,” it added.

Exports jumped by 10.8 percent to $8.15 billion during the month from $7.36 billion a year earlier, with electronic products accounting for more than half of total export earnings at $4.79 billion.

Under the sector, semiconductor exports rose by 26.1 percent to $3.7 billion. But as Chinabank pointed out, imports of electronic components likewise surged by 140 percent to $2.2 billion, underscoring the industry’s dependence on foreign inputs.

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As it is, total imports reached $14.12 billion in July, rising by nearly 20 percent from a year earlier. Electronic products also dominated the import bill, accounting for 32.6 percent, or $4.6 billion, of the total.

“This highlights an opportunity for the Philippines to deepen domestic electronics manufacturing and capture more value from the sector,” Chinabank said.

“A potential risk is a new round of semiconductor tariffs under US President Trump. However, any measures are likely to remain targeted and should have only a limited impact on the Philippine industry,” it added.

Energy-related purchases also kept the import bill high, with mineral fuel imports climbing 34.8 percent to $1.95 billion. This came amid renewed tensions between the United States and Iran, which pushed Dubai crude prices to an average of $76.7 per barrel in July, up from $69.2 a year earlier.