MANILA – An economist of ING Bank Manila forecasts lower trade and current account deficit for the Philippines in 2019, mainly due to projections of lower oil importation.
“Slightly lower than what we saw in 2018 mainly because (of) the trade deficit (which is) still quite substantial but narrow from what we saw in 2018,” Nicholas Mapa, ING Bank Manila senior economist said.
He, however, did not give specifics.
Data from the Philippine Statistics Authority (PSA) showed that exports in December 2018 posted a 12.3 percent contraction while imports dropped by 9.4 percent.
This brought the trade gap to USD3.75 billion, down from year-ago’s USD2.97 billion.
For the whole of 2018, imports grew by 13.4 percent while exports contracted by 1.8 percent.
Imports have been posting strong expansion given the solid growth of the Philippine economy, with output levels of above six percent.
This, in turn, has resulted to the deficit in the country’s current account (CA) position after years of being in surplus.
Bangko Sentral ng Pilipinas (BSP) data show that in the third quarter of last year, the country posted a CA deficit amounting to USD2.9 billion against the USD 1.1 billion surplus same period in 2017.
This was due to the widening gap in the trade-in-goods to USD13.5 billion from USD9.3 billion a year ago.
Other contributors to the CA deficit are lower net receipts on trade-in receipts and secondary income accounts.
In the first three quarters of 2018, the CA reversed to USD6.47 billion deficits from USD 968 million surplus as of end-September 2017.
Mapa said that if capital goods slide anew, after the 10.6 percent contraction in value, this will result to “more trade deficit compression.”
He, however, forecasts the trade gap to linger “because the export numbers continue to struggle.” (PNA)
