A worker stands on top of a cargo container as he assist the crane driver in arranging some containers at a shipping yard in Cavite City, south of Manila. REUTERS

MANILA – The Philippine trade deficit swelled by 171.7 percent to $3.55 billion in July 2018, from a gap of $1.31 billion a year earlier, the Philippine Statistics Authority reported.

Exports grew by 0.3 percent to $5.85 billion from $5.83 billion year-on-year, while imports accelerated by 31.6 percent to $9.40 billion from $7.14 billion.

The double-digit increase in imports was driven mostly by iron and steel shipments – up 135.5 percent.

“This still driven by a surge in infrastructure-related spending that unleashes the country’s full economic potential,” BDO Unibank Inc. chief strategist Jonathan Ravelas said.

Total external trade in goods reached $15.25 billion in July, up 17.5 percent from $12.97 billion year-on-year.

Heavy imports

The Philippine Exporters Confederation (Philexport) also attributed the widening trade deficit to the government’s infrastructure program.

“The trade deficit is really being driven by ‘Build, Build, Build’ due to heavy imports of constructions materials,” Philexport president Sergio Ortiz-Luis said.

Total external trade in goods reached $15.25 billion in July, up 17.5 percent from $12.97 billion year-on-year.

In a separate statement, the National Economic and Development Authority (NEDA) noted that trade grew for a fourth consecutive month in July.

“As the global trade situation becomes less encouraging, improving the overall climate for export development becomes all the more indispensable.

Trade war

Thus, the government needs to fast track the crafting of the Ease of Doing Business Act’s implementing rules and regulations,” Socioeconomic Planning Secretary and NEDA chief Ernesto Pernia said.

The ongoing trade war between the US and China has resulted in a growing coverage of tariff levies with both countries having imposed additional 25 percent tariff on $50 billion worth of each other’s goods.

“Trade war fears have weighed on business sentiment, and we now see softer global activity. With a resolution unlikely in the short term, the dispute is expected to dampen growth in both economies and drag down growth in the wider global economy,” Pernia said.

There is a need to promote forward and backward linkages to boost exports, Pernia said.

The deterioration in the global economic environment underlines the importance of ensuring that domestic economic fundamentals remain strong, he added. (GMA News)

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