The Philippines’ trade-in-goods deficit expanded in 2024, marking the largest trade shortfall in over two years as imports increased while exports kept declining, the Philippine Statistics Authority (PSA) announced on Friday.
Initial data from the PSA indicated the nation’s full-year trade balance — the difference between the values of imports and exports — grew by 3.1% compared to the previous year, resulting in a $54.21-billion deficit in 2024, up from the $52.59-billion gap in the preceding year.
The recent statistics highlight the smallest trade shortfall since the $57.65-billion deficit recorded in 2022.
Merchandise exports for 2024 decreased by 0.5% to $73.21 billion, falling short of the 4% growth forecast established by the Development Budget and Coordination Committee (DBCC) for 2024.
A year prior, exports had dropped by 7.5%.
Conversely, imports rose by 1% year on year to $127.43 billion in 2024, recovering from the 8% decline in 2023. The growth of imports fell short of the DBCC’s 2% growth objective.
In December, the country’s trade-in-goods deficit decreased to $4.14 billion from the $4.85 billion shortfall in November.
This represented the smallest trade gap in nine months or since the $3.35 billion deficit recorded in March 2024.
Merchandise exports for the month fell by 2.2% to $5.66 billion, a slower decline compared to the 8.6% contraction in November.
In value terms, the export total in December was the lowest in six months or since the $5.57 billion reported in June 2024.
Similarly, imports decreased by 1.7% to $9.79 billion, which was a slower decline than the 4.1% drop observed the previous month.
The import value was the lowest in nine months or since $9.57 billion in March 2024.
“In recent years, both exports and imports have shown considerable weakness and are hardly catalysts for economic growth,” commented Diwa C. Guinigundo, country analyst at GlobalSource Partners.
Mr. Guinigundo further noted that on a net basis, external trade has minimal influence on the economy.
“Weak exports are eclipsed by rising imports even as the latter have also been relatively sluggish lately, while modest imports signify insufficient manufacturing and business activities,” Mr. Guinigundo conveyed in a Viber message.
Moreover, he pointed out that over the past two years, the Philippine economy experienced some deceleration, falling short of the minimum growth targets.
In 2023, the Philippine economy recorded a growth of 5.5%, substantially slower than the 7.6% expansion seen in 2022.
This represented the weakest growth in three years since the 9.5% contraction in 2020.
The PSA will release the fourth quarter and full-year gross domestic product data on Jan. 30, Thursday.
Manufactured goods, which account for more than three-fourths of exports, fell by 2.6% to $58.34 billion last year.
Electronic products, which constitute the majority of manufactured goods and more than half of total exports, shrank by 6.7% to $39.08 billion. Notably, semiconductors decreased by 13.5% to $29.16 billion.
The United States remained the prime destination for Philippine-made products in 2024, with exports valued at $12.12 billion or 16.6% of total export revenue.
This was followed by Japan with $10.33 billion (14.1% share), Hong Kong with $9.6 billion (13.1%), China with $9.44 billion (12.9%), and South Korea with $3.57 billion (4.9%).
Capital goods imports saw a slight decrease of 0.1% to $35.7 billion.
Conversely, imports of raw materials and intermediate goods rose by 2% to $46.35 billion.
Imports of consumer goods also increased by 5.6% to $25.81 billion, while imports of mineral fuels, lubricants, and related materials saw a decline of 5.2% to $19.06 billion.
In terms of commodity category, electronic products had the highest import value at $27.37 billion in 2024, increasing by 2.7% from $26.64 billion a year earlier.
China was the largest supplier of imports for the year, providing goods worth $32.81 billion, accounting for 25.8% of the total import expenditure.
This was followed by Indonesia with $10.55 billion (8.3% share), Japan with $10.07 billion (7.9%), South Korea with $9.63 billion (7.6%), and the United States with $8.17 billion (6.4%).
Jesus L. Arranza, chairman of Federation of Philippine Industries, stated in a phone conversation that illegal trade and imports of consumer goods such as rice and sugar contributed to the expansion of the deficit for the year.
He also mentioned that the rise in smuggling within the country has caused a drop in domestic manufacturing.
“The president aims to stabilize rice and sugar prices… We also wish to lower prices for consumers, as they have already raised concerns,” he expressed in a blend of Tagalog and English.
Mr. Arranza further noted that the reduction in the deficit in December was due to goods already being delivered during the October-November timeframe, in anticipation of the season’s conclusion.
Mr. Guinigundo remarked that while it is advantageous that US tariff hikes will not be placed on Philippine exports, they may impact Philippine exports to China, which is part of the Southeast Asian nation’s semiconductor sector.
“This would necessitate a reassessment of Philippine exporters regarding their market strategy,” Mr. Guinigundo stated. — Pierce Oel A. Montalvo
