MANILA – Merchandise imports contracted by 6.8 percent in March 2015 as lower payments primarily for mineral fuels, lubricants and raw materials were recorded in the period, according to the National Economic and Development Authority (NEDA).

According to a report from the Philippine Statistics Authority, total import payments fell to US$5.1 billion in March 2015 from US$5.5 billion from the same period last year. The decline came after a 10.2-percent rebound in February 2015 and a 10.8-percent annual growth in March 2014.

Most trade-oriented economies in East and Southeast Asia, except for Viet Nam, posted a decline in merchandise imports in March 2015. The reduced value of imports primarily from PR China, South Korea and Singapore contributed to a drag on imports during the period.

Lower crude oil prices and the lower demand for non-oil mineral products reduced the value of imported mineral fuels and lubricants by 47.3 percent, to US$681.3 million in March 2015 from US$1.3 billion from the same period last year.

“The low oil-price condition remains favorable to the current balance of trade, particularly for trade-in-goods of the country as global oil prices continue to hover way below US$100 per barrel at US$51.6 for the first quarter of 2015,” said Economic Planning Secretary Arsenio M. Balisacan.

“The low price of oil prompted an increase in the overall volume of imported crude by 47.8 percent. It is expected that the increase in energy demand during the summer season will further drive imports of petroleum products,” he added.

Balisacan, who is also NEDA Director-General, emphasized that the low price of imported oil bodes well for the industrial sector, particularly for manufacturing and utilities sub-sectors given their high reliance on oil-based inputs.

Payments for raw materials and intermediate goods also fell slightly by 1.1 percent, to US$2.09 billion from US$2.11 billion in March last year. This was reflected in the strong decline in the imports of semi-processed raw materials (-6.2%).

“The drop in the imports value for semi-processed raw materials can be attributed to decreasing prices of raw materials, a trend which has been occurring for five consecutive months since November 2014,” the Cabinet official said.

On the other hand, the value of imported capital goods increased by 16.6 percent while that of consumer goods increased by 2.8 percent. These increases partly mitigated the drop in imports.

“The growth in the imports of major commodities, particularly capital goods and consumer durables, shows that the confidence in the economy continues to be strong and bodes well for growth this year and next,” said Balisacan.

He attributed the strong growth in capital goods imports in the last two months to the continuing brisk business activity.

“The net positive consumer sentiment based on the latest round of consumer expectations survey is expected to continue to drive consumption goods imports in the second quarter,” said Balisacan.

He therefore recommends that the government further improve the confidence of investors and consumers to induce more expansion and investment in capital goods.

“Also, as the government continues to monitor areas affected by the intense heat due to El Niño, careful planning and timely importation of food products particularly rice is critical to ensure stability of food prices especially in anticipation of an extended dry season,” Balisacan added.