MANILA – Lower payments for imported mineral fuels and lubricants and capital goods significantly outweighed the sustained growth in imports of raw materials and intermediate and consumer goods in May 2014 resulting in a 9.6 percent decline from May 2013, according to the National Economic and Development Authority (NEDA).
“The reversal in import payments for mineral fuels and lubricants in May 2014 from strong growth rates in the last two months significantly pulled down total imports. Moreover, sluggish importation of capital goods continued to weigh on imports outturn during the period,” said Economic Planning Secretary and NEDA Director-General Arsenio M. Balisacan.
Payments for imported goods in May 2014 were down to US$4.8 billion from US$5.3 billion in the same period last year. Given the slightly faster pace of imports growth relative to the 5.8 percent increase in exports in January to May 2014, trade-in-goods deficit widened to US$2.0 billion from US$1.8 billion as of January-May a year ago.
“Notwithstanding the successive contractions in capital goods imports since February 2014, the upward trend in the importation of raw materials and intermediate goods and consumer goods, which grew by 6.3 percent and 0.8 percent, respectively, is indicative of the continuing confidence of both businesses and consumers,” Balisacan noted.
The Cabinet official added that the upbeat business outlook and the expansion plans of businesses in the industry sector for the next two quarters suggest that a recovery in capital goods imports may be expected in the near-term.
Surveys conducted by the Bangko Sentral ng Pilipinas revealed that the overall confidence index (CI) of businesses rose to 50.7 percent in the second quarter of 2014 from 37.8 percent in the first quarter and is expected to be sustained in the third quarter, with a CI of 48.9 percent.
“The re-fleeting program of airline companies in line with increasing their flight routes and the government’s continuing efforts to augment power supply and to improve operational capability in search and rescue operations and in maritime law enforcement, are likely to boost merchandise imports in the coming months,” Balisacan said.
Meanwhile, Balisacan noted that the import of major food items declined despite current tightness in the domestic supply of food, indicating that the country has not taken advantage of trade opportunities to stem possible upward price pressures.
As for the sources of Philippine imports in May 2014, the People’s Republic of China had the biggest share at 15.2 percent amounting to US$724.4 million, followed by the United States of America with an 11.0 percent share, totaling US$525.7 million. However, decreases in purchases from these countries contributed to the overall decline in imports during the period.
The value of imported goods from major ASEAN-member trading partners represented 27.3 percent (US$1.3billion) of the country’s total merchandise imports, mostly on capital goods, materials accounting for the manufacture of electrical equipment, and consumer durables. Meanwhile, the European Union (EU) supplied US$526.7 million or about 11.1 percent of the country’s total import requirements in May 2014.
Citing the increasing regional integration and competition associated with the ASEAN Economic Community (AEC) in 2015, Balisacan stressed that the government should firm up efforts to encourage businesses to invest more on capital goods as these are crucial for increasing the global competitiveness of Philippine firms.
“In particular, higher importation of capital goods will make the technological know-how of domestic industries at par with other countries, and would likewise allow them to add greater value to Philippine-made goods,” Balisacan concluded.