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Yawning trade gap not worrisome

  • Written by People's Journal
  • Published in Business
  • Read: 408

National Economic and Development Authority (NEDA) Undersecretary for Policy and Planning Rosemarie 

Edillon said the country’s widening trade deficit was not a cause for worry.

Edillon said strong demand for intermediate and capital goods drove imports growth.

“Especially if you analyze this side by side with the MISSI (Monthly Integrated Survey of
Selected Industries where volume of production index) of manufacturing grew more than 20 percent.
This means those imported goods were really used in the production,” she said in an interview on
the sidelines of an economic conference on Friday.

The Philippine Statistics Authority (PSA) on Friday reported that total imports rose by
11.4 percent to USD 8.54 billion, while export grew 0.5 percent to USD5.22 billion.

These brought balance of trade in goods to a USD 3.32-billion deficit in January 2018,
higher than the USD 2.47-billion deficit during the same month last year.

Edillon said the country imports more infrastructure-related goods as the government is

working to close the infrastructure gap.

“If you are talking about bridges, airports, there are high technology components. It
would be good if you import the best technology and of course best value,” she added.

Edillon said trade deficit would be only worrisome if it became “too large” and the country
would have the so-called balance of payments (BOP) problem.

BOP is a summary of the economic transactions of a country with the rest of the world for a
specific period.

“But the thing is, we have still very healthy international reserve position. We have many
sources of foreign exchange so it is not a cause for worry,” she added.

Meanwhile, the PSA reported that by major type of goods, imports of raw materials and
intermediate goods, accounting for the largest share of 40.9 percent to total imports, rose by 14.9
percent to USD 3.49 billion in January 2018 from USD 3.04 billion last year.

Semi-processed raw materials, valued at USD 3.12 billion, comprised for 36.6-percent share
of the commodity group.

Imports of capital goods, accounting for a 32-percent share of the total imports, grew by
16.9 percent to USD 2.73 billion from USD 2.33 billion.

Inbound shipments of electronic products in January accounted for 26.1 percent of the total
import bill valued at USD 2.23 billion. It increased by 18.9 percent from the USD 1.88 billion last
year.

Minerals, fuels, lubricants and related materials ranked second with import value amounting
to USD 912.60 million, down by 8.6 percent from previous year’s USD 998.65 million.

Electronic products continued to be the country’s top export earner reaching USD 2.62
billion and accounting for 50.3-percent share of the total exports revenue in January 2018.

For his part, NEDA Director-General and Socioeconomic Planning Secretary Ernesto Pernia
said the government is targeting an 8-percent growth in merchandise exports for 2018, supported by
a revival of the agribusiness sector.