By Heather Caitlin P. Mañago
The Philippines’ trade shortfall in goods diminished to its two-month low in July, as exports surged by double digits while imports softened, according to the Philippine Statistics Authority (PSA) on Friday.
Initial data from the PSA indicated that the nation’s goods trade balance — the difference between exports and imports — reached a deficit of $4.05 billion in July, which is 17% less than the $4.88-billion deficit recorded in July of the previous year.
From one month to the next, the trade gap decreased from the revised $4.40 billion in June.
July recorded the narrowest trade deficit since the $3.63-billion gap in May 2025.
For the first seven months, the trade shortfall lessened to $28.46 billion, 4.9% down from the $29.93-billion deficit the year before.
The nation’s trade balance has remained in deficit for over ten years, following the $64.95-million surplus documented in May 2015.
During the January-to-July timeframe, exports rose by 13.9% to $48.62 billion, while imports increased by 6.1% to $77.09 billion.
The Development Budget Coordination Committee (DBCC) anticipates a 2% drop and 3.5% expansion in exports and imports, respectively, this year.
EXPORTS INCREASE
Total outbound sales of goods produced in the Philippines surged by 17.3% year-on-year in July to $7.34 billion, surpassing the 0.1% increase from a year prior. However, this growth was slower than the revised 26.9% rise in June.
This marked the slowest growth rate for exports in two months or since the 15.5% increase logged in May.
In monetary terms, July recorded the highest export value since the $7.75 billion in October 2022.
“The quicker rise in exports compared to imports contributed to the reduction of the country’s trade deficit,” Cid L. Terosa, senior economist at the University of Asia and the Pacific, stated in an email.
He credited the rise in exports to increased demand for agro-based and mineral products.
Exports of agro-based products climbed by 20.4% year on year to $615.59 million in July.
Mineral products, which constitute 12.1% of total exports, surged by 62% annually to $887.18 million for the month.
Mr. Terosa associated the heightened demand for these commodities with “stronger than anticipated economic growth in major economies, seasonal demand in export markets, and a depreciated peso in July 2025 compared to June 2025.”
For Senen M. Perlada, Executive Vice-President and Chief Operating Officer of Philippine Exporters Confederation, Inc. (Philexport), the narrowing of the trade deficit stemmed from “the rise in exports (primarily driven by) electronic goods (mainly semiconductors), mineral products (including gold).”
The nation’s exports of electronic goods, which comprised 53.5% of total exports, continued to be the leading commodity, climbing by 20.7% to $3.92 billion.
Outbound sales of other mineral products skyrocketed to more than double at $522.39 million, while other manufactured goods declined by 13.9% to $395.77 million.
Mr. Perlada remarked that heightened global demand for electronics and a rebounding semiconductor industry are propelling Philippine exports.
“A widespread recovery in semiconductor, AI (artificial intelligence), and datacenter-led chip demand in 2025 seems to have stimulated orders for electronics and components across Asia, thereby continuing to elevate export volumes and values,” he stated in an email.
“The postponement of Trump’s implementation of reciprocal tariffs to Aug. 7 provided exporters in multiple countries, including the Philippines, additional time to increase shipments to markets in major economies before the tariffs took effect,” Mr. Terosa noted.
Likewise, Mr. Perlada observed that the export boost is attributable to frontloading ahead of the tariff situation in the United States (US), its primary export market.
George T. Barcelon, chairman of the Philippine Chamber of Commerce and Industry (PCCI), mentioned in a phone discussion that “due to the uncertainty regarding the tariff levels imposed on our exports, many exporters are adopting a ‘wait-and-see’ approach.”
In July, the US was the leading destination for Philippine-made goods at $1.16 billion with a 15.8% share of total exports. This was closely followed by Hong Kong ($1.12 billion or 15.2% share), Japan ($996.44 million or 13.6% share), and China ($832.57 million or 11.3% share).
IMPORTS SLOWDOWN
In contrast, the nation’s merchandise imports decelerated by 2.3% year on year to $11.38 billion in July, a decrease from the 15.7% increase in June.
This represented the weakest growth in two months, or since the 1.1% decline in May.
Similarly, the import expenditure that month was the lowest in two months, following the $10.95 billion in May.
Mr. Perlada stated that “imports have been growing at a slower pace and have recently been constrained by subdued oil and commodity import requirements and possibly shifting shipping patterns.”
He added that these movements reflect a blend of sustained global demand for electronics and semiconductors, along with the subsequent effects of price fluctuations in commodities — especially in gold and other minerals.
By commodity category, electronic goods, which account for 24.6% of total imports, increased by 10.2% to $2.80 billion in July.
Conversely, mineral fuels, lubricants, and related materials fell by 7.8% to $1.32 billion. This was succeeded by a 2.8% drop in transport equipment to $1 billion.
China was the leading source of imports in July, with $3.40 billion (29.9% share). South Korea followed with $1.01 billion (8.9% share) and Indonesia with $898.40 million (7.9% share).
OUTLOOK
Looking ahead, Mr. Terosa indicated that anticipated risks include geopolitical tensions and trade frictions following the implementation of Trump’s reciprocal tariffs.
“Renewed tariff actions from countries like China and India, among others, may begin to have repercussions toward the end of the year. These could rapidly alter cost structures and trade patterns,” Mr. Perlada remarked.
Another concern he highlighted is the decline in semiconductor demand, which could hinder the momentum of Philippine exports.
“In the future, forthcoming trade reports will likely provide clearer insight into the effects of US tariffs on trade, especially as the higher 19% levy commenced earlier this [August],” noted Chinabank Research.
The report added that increased demand from alternative export markets may mitigate the impact of dwindling US demand when frontloading diminishes and higher tariffs take effect.
“However, the sector could encounter difficulties if US President Trump follows through on his threat of a 100% tariff on semiconductors. Currently, the majority of the Philippines’ chip exports are exempt from the increased US reciprocal tariffs,” it stated.
Trade Undersecretary Allan B. Gepty stated on Thursday that the government is pursuing US tariff exemptions for exports of agricultural products, electronics, vehicle tires, bags, and aircraft components.
Mr. Trump had previously announced his intention to declare higher tariffs on semiconductor imports, though companies intending to establish manufacturing facilities in the US would be exempted. The US has yet to announce new global tariffs concerning semiconductors and pharmaceuticals.