MANILA – The Philippines’ trade deficit narrowed in July as exports jumped while imports declined for a second straight month, a good omen for economic growth in the third quarter.
The Philippines had a trade gap of $1.65 billion in July, smaller than the previous month’s $2.15 billion deficit, government data showed, suggesting the Southeast Asian nation could end the year with a lower-than-expected trade shortfall.
The Philippines has one of the world’s fastest-growing economies and strengthening global trade could complement robust domestic consumption.
President Rodrigo Duterte’s government aims to sustain annual growth above 7 percent during his six-year term.
Exports rose at an annual pace of 10.4 percent in July compared with previous month’s 0.8 percent gain, bringing year-to-date growth to 13.9 percent, helped by a double-digit rise in electronic products, the top export item.
Reduced imports of iron and steel, electronic components and industrial machinery and equipment shrank July imports by 3.2 percent, a second declining month.
“Positive base effects for exports and a favorable economic environment in major export markets coupled with moderate import growth imply that the trade deficit this year may not be as bad as prevailing market sentiment,” said Joey Cuyegkeng, economist at ING bank in Manila.
The narrower trade gap could also moderate pressure on the Philippine peso, Cuyegkeng added. The peso weakened to 11-year lows last month on fears of a larger current account deficit this year, following a record trade gap in May.
Gus Cosio of First Metro Asset Management also said the narrowing of the trade deficit is good as it removes worries that the country is moving towards chronic deficit.
Government offices, schools and financial markets were shut on Tuesday because of flooding.
The peso closed at 50.90 to the dollar on Monday after hitting a near one-month high on September 8.
Gross domestic product rose 6.5 percent in the second quarter from a year earlier, picking up from the 6.4 percent pace in the first quarter, and matching the bottom end of the government’s 6.5-7.5 percent growth target for this year.
Manila aims to lift growth to as much as 8 percent during Duterte’s term through a six-year, $180 billion “Build, Build, Build” infrastructure program to bring down poverty and create jobs.
The government said on Tuesday that the unemployment rate eased in July for a second straight quarter to reach 5.6 percent. — with a report from ABS-CBN News
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