By Ben O. de Vera, January 11 2019; Philippine Daily Inquirer
Image Credit to Business World
The country’s chief economist on Thursday urged further opening up the manufacturing and export sectors to foreigners as he expressed concern over the yawning current account shortfall caused by the widening trade deficit, which at end-November last year already surpassed the record 2017 figure.
In a statement Thursday, Socioeconomic Planning Secretary Ernesto M. Pernia said the rise in imports albeit anemic exports should be a cause for concern. He said the trade gap “emphasizes the need to reform legislation to allow foreign investments in firms catering to the domestic market, in addition to expanding their exporting activities.”
The Philippine Statistics Authority’s (PSA) latest preliminary report showed the country’s merchandise exports declined 0.3 percent year-on-year to $5.6 billion last November while imports sustained a growth, climbing 6.8 percent to $9.5 billion during the same month.
The PSA said the surge in imports in November was led by the following products: cereals and cereal preparations; mineral fuels, lubricants and related materials, iron and steel; other food and live animals; plastics; industrial machinery and equipment; telecommunication equipment and electrical machinery; miscellaneous manufactured articles; electronic products and transport equipment.
Philippine-made shipments, meanwhile, suffered a decline mainly due to slower sales of chemicals, ignition wiring sets, coconut oil, and electronics—the country’s biggest export commodity, the PSA said.
End-November trade-in-goods deficit reached $37.7 billion, thus exceeding the $27.4-billion deficit for the entire 2017.
In November alone, the trade deficit widened to $3.9 billion from $3.3 billion a year ago.
The wider trade deficit exacerbated the country’s current account deficit as more dollars were spent for importation. The current account deficit, in turn, put pressure on the peso, which weakened to 13-year lows last year.
The Bangko Sentral ng Pilipinas (BSP) had said the current account was projected to end 2018 at a $6.4-billion deficit, or over twice larger than the previous projection of $3.1 billion. The current account deficit could further increase to $8.4 billion in 2019.