By Chino S. Leyco
The country’s trade deficit widened in November last year amid strong imports on the back of declining export receipts, the Philippine Statistics Authority (PSA) reported yesterday.
Based on the latest PSA data, the Philippines incurred a trade deficit of $3.9 billion last November, higher compared with $3.28 billion gap recorded in the same month in a year before.
However, the November figure is smaller compared with $4.08 billion deficit registered in the previous month.
In November, imports grew 6.8 percent to $9.47-billion while exports slipped 0.3 percent to $5.57-billion, the PSA reported.
Meanwhile, the National Economic and Development Authority (NEDA) also said the country’s total merchandise trade in the same month grew at its slowest pace since March last year at 4.1 percent to $15 billion.
For the January-November period, total trade deficit widened to $37.7 billion compared to $23.4 billion for the same period last year.
According to NEDA, November’s trade performance was also largely due to the slowdown in imports after recording double-digit growth rates since April 2018.
Imports growth is attributed to the increase in purchases of most commodity groups, except consumer goods, NEDA said, while the decline in exports was mainly driven by the contraction in mineral and electronics exports.
“Moderation in global growth appears inevitable in 2019. Given a less encouraging global economic outlook, the country needs to ramp up the implementation of strategies outlined in the Philippine Export Development Plan 2018-2022,” Socioeconomic Planning Secretary Ernesto M. Pernia said.
He added that supporting micro, small, and medium enterprises (MSMEs) is necessary to increase their participation in global value chains.
“Simplifying loan processes, provision of financial literacy trainings, and facilitation of linkages between MSMEs and large corporations are some ways to spur the internationalization of MSMEs,” Pernia said.
Meanwhile, the Cabinet official emphasized the importance of reforming the Foreign Investment Act to allow foreign firms to transfer manufacturing facilities to the Philippines to serve both the domestic and regional (ASEAN) markets.
“A widening current account balance due to rising capital goods imports and anemic exports growth is a cause for concern. The widening 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,” Pernia said.
He added that a low-hanging fruit is the full implementation of the Ease of Doing Business Act, which calls for the creation of the Expanded Anti-Red Tape Authority and the full operationalization of the National Single Window.
Both measures will benefit existing firms, encouraging expansion, as well as attract new firms to do business in the country.