The Philippines’ trade-in-goods shortfall increased to a three-month peak in January as both shipments abroad and inbound goods rose, according to a report by the Philippine Statistics Authority (PSA) released on Friday.
Experts indicated that the trade deficit could further deteriorate this year as the US trade conflict intensifies.
Initial statistics from the PSA revealed that the nation’s trade balance — the disparity between exports and imports — surged to a $5.09-billion deficit, up from a $4.14-billion deficit in December and the $4.36 billion gap recorded the previous year.
The new data indicated the largest trade gap in three months since the $5.81-billion deficit in October 2024.
PSA statistics demonstrated that year-on-year, merchandise exports in January rose by 6.3% to $6.36 billion, exceeding the 6% growth forecast established by the Development Budget and Coordination Committee (DBCC) for this year.
On a month-on-month basis, exports increased by 12.2%, ending a streak of four consecutive months of decline.
In terms of value, it was the highest level since $6.75 billion recorded in August 2024.
Imports rose by 10.8% year on year to $11.45 billion in January. Month-on-month, it increased by 16.7%, halting two months of downward movement.
The growth in imports also surpassed the 5% forecast set by the DBCC. The value of imports reached its highest point in three months, or since October last year when it was $12 billion.
“The fact that it [electronics and semiconductors] has been in the negative for a series of months suggests that the demand for our semiconductors is not as robust as the newer, more advanced semiconductors globally, which are primarily utilized in the AI industry,” George N. Manzano, an economist from the University of Asia and the Pacific, stated in a phone conversation.
Electronic goods, the country’s leading export category making up over half of January’s exports, experienced a 2.6% decrease to $3.37 billion in January from $3.46 billion during the same month in 2024.
Semiconductors, which represent nearly 40% of total exports and three-fourths of electronic goods that month, also fell by 6.8% year on year to $2.52 billion.
These declines were tempered by double-digit increases noted in other manufactured items (up by 66.6% to $471.07 million), coconut oil (up 80.3% to $249.05 million), and various mineral products (up by 33.1% to $247.09 million).
“The fact that our exports are also on the rise is a positive sign,” Mr. Manzano remarked.
The United States continues to be the primary destination for locally produced goods in January, with exports valued at $1.13 billion, accounting for 17.7% of total export revenue.
This was followed by Japan with $945.80 million (14.9%), Hong Kong with $722.81 million (11.4%), China with $645.57 million (10.1%), and Singapore with $266.48 million (4.2%).
In contrast, the import of electronic products increased by 14.2% to $2.51 billion in January, while mineral fuels, lubricants, and related materials rose by 7.1% to $1.62 billion.
Other import items that experienced growth included transport equipment (up by 8.5% to $906.22 million), industrial machinery and apparatus (up by 20% to $592.90 million), and iron and steel (up by 17.8% to $497.35 million).
China remains the largest supplier of imports in January, amounting to $3.31 billion in goods, representing 28.9% of total imports.
It was followed by Japan with $912.71 million (8% share), Indonesia with $892.95 million (7.8%), South Korea with $862.27 million (7.5%), and the US with $690.81 million (6%).
George T. Barcelon, chairman of the Philippine Chamber of Commerce and Industry, noted in a phone interview that the country’s trade deficit has been increasing over recent years.
“Domestically, we are not generating enough competitive products for local suppliers or manufacturers to meet market demands. Therefore, it is more economical to import. We have a substantial deficit with countries worldwide, particularly with ASEAN nations. These gaps need to be addressed,” Mr. Barcelon elaborated.
“Every time we encounter a trade deficit, it means jobs are being created in other countries, and not within our own,” he continued.
Mr. Barcelon also pointed out the uncertainties surrounding the impending trade conflict posed by the US administration under President Trump.
“One concern among business people is how our trade will proceed, as our largest market continues to be North America,” he mentioned.
“When uncertainty prevails, businesses are less inclined to invest… there’s minimal investment as they wait to see if the trade war will indeed take shape,” he added, mixing Filipino with English.
“So right now, the most significant issue in the global economy is what action the US will take. Because the US is such a major buyer of our exports,” he noted.
In a research note, Chinabank Research stated that the outlook for the industry might remain gloomy this year as ongoing initiatives may yield results only in the long term.
Chinabank Research also indicated that a considerable risk would arise if Mr. Trump proceeds with his intention to impose 25% tariffs on semiconductors this year.
Additionally, it stated that the shortfall in trade deficit “could expand further this year, with major risks stemming from growing uncertainties surrounding global trade policies, alongside Trump’s proposal to impose reciprocal tariffs since the US is the main destination for Philippine exports.”
Markets are bracing for the potential repercussions of the trade policies introduced by US President Donald J. Trump, including reciprocal tariffs on all nations that tax US imports.
On Thursday, Mr. Trump is set to impose 25% tariffs on Mexican and Canadian goods effective March 4, along with a further 10% duty on Chinese imports of medicinal products, as reported by Reuters. Earlier in February, Mr. Trump did impose a 10% levy on Chinese imports. — Kenneth H. Hernandez
