Trade deficit narrows in 2010

MANILA, Philippines – The country’s trade deficit narrowed last year as exports rose faster than imports, the National Statistics Office reported on Friday.

Data from the NSO showed the balance of trade in goods registered a deficit of $3.27 billion in 2010, lower than the $4.656 billion deficit in 2009.

Merchandise imports rose 25.2% to $4.93 billion in December, taking the full-year import bill to $54.7 billion, up 26.9% from 2009. The 2010 growth was higher than a government forecast of 20%.

The main import item, electronics, rose 35.3% to $1.706 billion in December from a year ago.

Earlier, the NSO reported that exports grew 34% to $51.4 billion in 2010, also beating the government’s target of a 15% rise.

Better exports expected

The positive import data in December paints a rosy outlook for the export sector, which uses bulk of imports as raw materials for its products.

“It is a good indication of potential performance of our electronic exports for coming months. When you take a look at indications in other countries, it looks like exports will continue to be good based on the import data we are getting for electronics,” said Jose Mario Cuyegkeng, economist at ING, Manila.

Cuyegkeng demand from the country’s trading partners will continue to improve along with global recovery.

However, he cautioned: “the developments in the crude oil sector as a result of the turmoil in the Middle East is putting to question the strength of that recovery.”

Top import sources

The Philippines imports nearly all of its crude oil requirements and in recent years has been the world’s biggest rice buyer.

Japan was the country’s top import source in December, accounting for 12.1% of total purchases, followed by the United States with 11% and China at 9.8%.

Imports from Eastern Asia — the top import source by economic bloc accounting for 39.8% of total shipments — climbed 27% in December from a year earlier. Southeast Asia and the European Union were the second and third top economic blocs.

Apart from electronic parts and fuel, the Philippines’ other top imports are cereals such as rice, electrical and industrial machinery and transport equipment. –abs-cbnNEWS.com with a report from Reuters