Trade deficit shrinks in June as exports rebound


Posted at Aug 07 2019 12:26 PM

MANILA - The country's trade deficit narrowed to $2.47 billion in June from $3.55 billion in the same period last year as exports slightly outperforms imports, government data released Wednesday showed.

Exports totaled for the month $6.01 billion, up by 1.5 percent compared to the $5.92 billion in June 2018, according to the data released by the Philippine Statistics Authority.

Imports were worth $8.48 billion, down by 10.4 percent compared to $9.47 billion in June last year.

Although exports enjoyed "modest" growth despite trade war fears, the decline in imports could affect the second quarter economic growth, ING Bank economist Nicholas Mapa said.

Budget delays, which also trimmed the gross domestic product growth in the first half to 5.6 percent, as well as high borrowing costs were risks to economic growth in the second quarter, he said.

But as the government plays catch up on spending and with recent monetary policy adjustments, Mapa said GDP growth could be back above 6 percent.

"The relatively less severe trade gap could be one factor for the peso’s improved performance for the month although the contraction in capital imports could take off even more shine from the 2Q GDP growth print," Mapa said.

"The budget delay and still elevated borrowing costs have likely hit capital formation with the import numbers showcasing this development and we hope that with government spending back online and BSP’s recent turnabout in policy direction, we can see growth easily back above 6 percent to save our string of annual growth above 6 percent," he said.