DOF: Reforms to support the growth of PH trade

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MANILA, Philippines – The Philippines is expected to maintain merchandise trade growth over the medium term following reforms conducive to economic recovery, the Department of Finance (DOF) has said.

In an economic bulletin last Saturday (April 2), DOF Chief Economist and former Undersecretary Gil Beltran noted that despite the Omicron-induced infection spike last January that reignited tighter pandemic restrictions, Exports and imports combined increased 20.1% year-over-year to $16.8 billion. The value of imported goods at the start of this year jumped 27.5% to $10.7 billion, while exports rose 8.9% to over $6 billion.

“Additionally, total trade for the month was 13% higher than the total recorded in 2019. Imports and exports were 12.3% and 14.2% respectively above their 2019 levels,” Beltran said.

Before the pandemic, total international merchandise trade in January 2019 stood at $14.9 billion and increased to $15.4 billion in January 2020, before the COVID-19 related lockdowns. In January 2021, bilateral trade fell more than 9% to $13.9 billion amid the prolonged pandemic.

For Beltran, “the country must continue to guard against the risks posed by COVID-19 through a robust vaccination program and a cautious reopening of the economy to maintain the recovery momentum.”

“Key structural reforms such as the recently passed amendments to the Retail Trade Liberalization Law, the Foreign Investment Law and the Civil Service Law will play an important role in sustaining the continued recovery of economic activities.” , Beltran said.

Prior to the release of February’s foreign trade figures on Friday (April 8th), think tanks and financial institutions predicted continued growth in exports and imports.
As of Friday (April 1), London-based think tank Capital Economics predicted exports rose 10% in February, while imports likely rose 2%.

HSBC Global Research in an April 1 report forecast a larger merchandise trade deficit of $4.72 billion last February compared to January’s $4.69 billion, on the back of an estimated increase of 30 .9% of imports outpacing export growth of 9%.

In a report on Monday, Moody’s Analytics said it also expects a larger trade deficit in February, amounting to $4.9 billion.

But for Miguel Chanco, chief economist for Pantheon Macroeconomics for emerging Asia, the February trade deficit probably narrowed to $3.5 billion “thanks in part to a more import-driven Lunar New Year.”

South Korea’s trade data signal suggests export growth jumped to 17% year-on-year – strongest in six months, while import growth likely continued to slow, to 21% year-on-year annual” in February, Chanco said. Monday (April 4).

For 2022, the government is targeting 10% merchandise import growth and 6% merchandise export expansion.

TSB

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