By Michelle Anne P. Soliman
THE COUNTRY’s external merchandise exports and imports fell by a quarter in the first half of 2020, revised trade data by the Philippine Statistics Authority (PSA) showed.
The country’s total external trade in goods — defined as the sum of export and import goods — was $67.64 billion in the first half, 24.5% down year on year compared to the 1.8% growth in the first half of 2019.
Broken down, merchandise exports shrank by 17.6% to $28.48 billion in January-June 2020 from $34.58 billion in the same six months in 2019. This marked a turnaround from a flat 0.5% growth recorded in the first half of last year.
Meanwhile, the merchandise import bill dropped 28.8% to $39.16 billion in the first half from a 2.6% expansion last year.
These figures exceed the Development Budget Coordination Committee’s revised forecast of 16% and 18% contraction for exports and imports, respectively, for this year.
Trade balance in the first half amounted to a $10.67-billion deficit, 47.7% narrower than the $20.42-billion trade gap in the 2019’s first half.
The value of manufactured goods exports declined by 19.7% to $22.83 billion. Likewise, agro-based products slipped by 6.7% (to $2.46 billion), forest products by 30.5% ($118.22 million), and mineral products by two percent ($2.42 billion).
On the other hand, petroleum products grew by 83.2% to $161.93 million.
Electronic products, which made up more than half of total exports, shrank by 14.9% to $16.09 billion.
On the import side, all major commodity groups likewise recorded year on year declines with mineral fuels, lubricant and related materials posting the biggest drop with 46.4% (to $3.56 billion), followed by consumer goods (-29.3% to $6.51 billion), capital goods (-28.2% to $12.98 billion), and raw materials and intermediate goods (-23.5% to $15.75 billion).
“With the world forced to hunker down, the global economy entered a recession with the move of goods, services and even people slowed to a standstill. Demand for Philippine exports suffered as a response with the entire world economy on the downtrend,” ING Bank N.V. Manila Senior Economist Nicholas Antonio T. Mapa said in an e-mail.
“[D]emand for imported consumer, fuel, capital and raw materials fell off significantly, with the economy at the brink of a depression style downturn,” he added.
The Philippine economy entered a recession after posting a record 16.5% contraction in gross domestic product (GDP) in the April to June period and a 0.7% drop in the first quarter as the lockdown halted economic activity. For the first half, GDP decline averaged by nine percent, lower compared to the government’s initial expected contraction of 2%-3.4% this year, as well as the revised 5.5% decline.
“In the coming months, we expect these trends to continue, with trade weighed down by poor demand for our exports while our imports revert to 2016 levels as consumers cut back on spending and corporations hold back on making new investments with the recession in full effect,” Mr. Mapa said.
In a separate email, Asian Institute of Management economist John Paolo R. Rivera offers a positive outlook.
“This should improve in the coming months given the relaxing of quarantine policies and resumption of consumption, production, and many economic activities. As we eventually manage and contain the pandemic, the economy is expected to bounce back. The speed of recovery is dependent on how soon we can manage, contain, or co-exist with the coronavirus,” he said.