MANILA – Merchandise imports recorded a 14.2 percent decline in January 2015 as payments for mineral fuels and lubricants, capital and consumer goods contracted in the period, according to the National Economic and Development Authority (NEDA).

“Lower oil prices primarily caused the imports bill to decline significantly in January 2015. Over the medium term, payments for imported crude oil may remain lower, tempering the total value of Philippine merchandise imports in 2015,” said Economic Planning Secretary Arsenio M. Balisacan.

According to a report of the Philippine Statistics Authority, the total import payments fell to US$5.1 billion in January 2015 from US$6.0 billion in the same period last year. This was a reversal from the 0.4-percent year-on-year growth in December 2014 and 24.7 percent expansion in January last year.

The 4.3-percent increase in the purchase of raw materials and intermediate goods, which accounts for nearly half (48.4%) of the country’s total imports, was not able to pull up the reduced payments for mineral fuels and lubricants, capital goods and consumer goods in January 2015.

“With oil inventories remaining at high levels and with moderate global growth projections continuing to limit energy demand, it may take time for crude oil prices to fully recover to the more than US$100 per barrel annual average price in 2011-2013,” the Cabinet official added.

Nonetheless, the trade-in-goods deficit narrowed to US$0.8 billion in January 2015 from US$1.6 billion in the comparable month last year due to the steeper decline in import payments compared to the decrease in exports at 0.5 percent.

In the coming months, the buoyant outlook on the domestic economy is seen to support higher imports of raw materials and intermediate goods, capital goods, and consumer items.

“Our prospects for the business sector, including export-oriented industries, remain largely positive, especially in the quarter ahead, as more businesses have expressed their interest to expand operations, especially the manufacturing sector,” said Balisacan, who is also NEDA Director-General.

“Consumer spending is also likely to remain upbeat, in line with increases in income opportunities as reflected in the January 2015 employment numbers,” he added.

Moreover, downside risks from port congestion in Metro Manila may have eased, with utilization rates gradually going back to normal levels. Major port projects set by the Philippine Ports Authority this year are expected to further improve trade facilitation and eventually increase external trade.

To offset the reduction in government customs revenue from lower oil prices, Balisacan recommends increasing the excise taxes on petroleum products. “This should be designed in a way that the benefits of declining oil prices are shared between the government and the private sector, while moderating the impact on the environment,” explained Balisacan.

“Also, there should be continuing efforts in making the country more conducive to investments to complement the benefits of lower oil prices, as this would be a good opportunity for major industry players to lower costs, boost profits, and ramp up expansion in investments,” the NEDA official added.

Meanwhile, the People’s Republic of China had a share of 15.4 percent of the total value of inward shipments, sustaining its role as the top supplier of Philippine imported goods. It was followed by Singapore (9.1%), United States of America (9.0%), Germany (8.2%), Japan (7.7%), Taiwan (7.2%), South Korea (6.5%), Thailand (5.1%), Saudi Arabia (4.7%) and Malaysia (4.2%).