November 7, 2018
The country’s total merchandise trade grew stronger in September 2018 due to robust imports of capital goods, which is vital for the long-term growth of the domestic economy, the National Economic and Development Authority said.
The Philippine Statistics Authority reported today that the country’s total trade grew by 13.5 percent in September 2018, reaching USD15.6 billion. This was significantly higher than the 7.9 percent growth recorded in August.
Imports notably rose 26.1 percent from last month’s growth rate of 11.0 percent.
Specifically, purchases of capital goods grew by 25.4 percent in September, the sixth month of its double-digit growth rate. Accounting for 32.5 percent of imports in January to September 2018, purchases of capital goods amounted to more than USD26 billion.
“The growth in import of capital goods could indicate that firms are making long-term investments. The import of raw materials and intermediate goods could also indicate the vibrancy of the manufacturing sector as it is expected to sustain its positive growth in the remaining months of the 2018,” Socioeconomic Planning Secretary Ernesto M. Pernia said.
“Philippine import payments are seen to remain elevated until 2019, primarily due to imports of capital goods and raw materials to sustain the government’s Build, Build, Build infrastructure and manufacturing resurgence programs,” Pernia said.
Meanwhile, with weak global growth, exports contracted (-2.6 percent) in September after three months of positive growth, as sales of manufactures and minerals products decreased.
“Downward adjustments in economic growth forecasts signal that global growth may have already peaked. Global growth is seen to remain on the positive but to decelerate and be uneven across countries,” Pernia said.
“Improving the export competitiveness of the country as stipulated in the Philippine Export Development Plan 2018-2022 becomes more urgent. The Plan promotes, among others, an enabling environment for innovation to boost exports growth,” Pernia said.
“Moreover, given the weak global demand, the country must really pump up domestic demand. We need to encourage expansion of domestic firms, and also encourage foreign investment in domestic-market oriented firms,” Pernia said.
He added that removing cumbersome regulatory impediments through the effective implementation of the Ease of Doing Business Act and the enactment of the 11th Regular Foreign Investment Negative List (RFINL) will help in attracting more investments to the country.
“The recent RFINL is a step in the right direction of encouraging the expansion of domestic market-oriented firms. But we will require legislative action to further allow more foreign investments in other areas and activities, eventually creating more jobs and reducing imports,” Pernia said.