Wider trade gap no cause for panic

The wider trade deficit in November last year is no cause for concern as unfavorable base effects are starting to fade, while month-on-month figures actually showed growth in both exports and imports, according to London-based Pantheon Macroeconomics.

Miguel Chanco, Pantheon’s chief economist for emerging markets in Asia said in a commentary that two-way trade enjoyed a simultaneous month-on-month gain in November for the first time in three months.Chanco said exports rebounded by 3.2 percent month-on-month in November following two straight months of decline.

That stood in stark contrast to the year-on-year reading, which saw outbound shipments collapse for the third consecutive month in November to $6.13 billion, down by 13.7 percent.

“Looking ahead, the extremely unfavorable year-on-year base effects will unwind more sharply in the December and January reports, which should be enough to return headline growth automatically to the black,” Chanco said.

Meanwhile, he said imports rose by 1.9 percent on a sequential basis in November, building on October’s 4.5 percent bounce and was “underpinned more by real demand”.

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“It appears that the downturn in capital goods imports is finally showing signs of bottoming out,” Chanco said.

Data from the Philippine Statistics Authority showed the country’s trade gap bloated 26.3 percent year-on-year to $4.69 billion in November. This was  larger than the $4.39-billion shortfall in October. INQ