By Ian Nicolas Cigaral, November 4, 2020; The Philippine Star

MANILA, Philippines — Exports returned to growth in September but a downtrend in imports persisted, albeit at a slower pace, reflecting an economy that is slowly coming out a pandemic-induced shock.

Total merchandise trade shrank 9.2% year-on-year to $14.14 billion, the fifth month contraction has narrowed from a record slump seen at the height of lockdowns in April, the Philippine Statistics Authority reported on Wednesday.

Broken down, exports grew 2.2% annually to $6.22 billion, the first time the value of outbound shipments went up since February. Imports, however, continued to shrink 16.5% to $7.92 billion, although this was more tempered than previous month. In sum, the trade deficit amounted to $1.71 billion, down by half from last year.

Analysts, when asked, differed on their assessments. Steve Cochrane, chief Asia Pacific economist at Moody’s Analytics, chose to drill down on the recovery of exports which he said is “good news.”

“Until now the Philippines has lagged behind much of ASEAN for exports. The whole region has been improving month by month as global trade has improved. Philippines seems to finally gaining from global trade,” Cochrane said in an e-mail.

But Rajiv Biswas, chief Asia Pacific economist at IHS Markit, said the tepid imports showed an overall weak economy. “This reflects the continued severe impact of the pandemic and various ongoing restrictive measures on domestic consumption and investment in the Philippines,” he said in a separate e-mail.

Indeed, lackluster trade has only added gloom to the Philippines’ economic outlook which economic managers are trying to turn a little rosy with an economy out of lockdown since June. Trade has hardly delivered however, until now with exports generating higher dollar receipts.

Broken down, seven of 10 top export materials posted year-on-year growth, led by copper up 133.9%, other mineral products (73.3%) and metal components (32.9%) in September.

Electronic products, which accounted for the 58.3% of shipments, also finally posted some expansion by 0.8%, data showed. On the flip side, banana exports went down 32.9% year-on-year, as well as machinery and transport equipment by 2.7%.

At the same time however, imports sustained a decline since April 2019 led by a 53% drop in transport equipment. Fuel imports also decreased 51.4%, while shipments of industrial machinery equipment slid 23.3%. All these at a time they should be rising with infrastructure spending supposedly leading the recovery bid of the Duterte administration.

“This shows a broad based downturn in economic activity as the Philippines remains mired in a recession,” Nicholas Antonio Mapa, senior economist at ING Bank in Manila, said in a commentary.

“The sustained downturn in imports of raw materials and capital goods points to a continued deterioration in productive capacity and potential output, which does not bode well for prospects for the economic recovery,” he added.

For the first 3 quarters, both imports and exports remained down as the pandemic tempered trade activity. The former plummeted 26% year-on-year, while the latter sank 13.8% in the same period.