Imports growth picks up

IMPORTS EXPANDED anew in June, recording the fastest growth pace in 10 months following an electronics shipments rebound and a transport equipment surge, the government yesterday reported.

A total of $5.101 billion worth of goods was imported during the month, the National Statistics Office (NSO) said, up 13.3% from a year earlier. It was the fastest growth rate since August 2011’s 13.8%. Month on month, however, imports shrank by 5.3% from May.

Aggregate imports went up by 0.4% to $30.761 billion in the first semester and the trade deficit narrowed to $4.003 billion from $5.807 billion in the same period last year.

The government is aiming for 12% growth in imports this year, along with a 10% hike in exports.

Cid L. Terosa, senior economist at the University of Asia and the Pacific, attributed the rise to higher demand for electronics and transport equipment.

Electronics — the country’s biggest import with a 28.6% share of the total — posted its first gain in 13 months, growing by 27.1% to $1.458 billion. Month on month, electronic shipments also expanded by 1.2% from $1.440 billion in May.

Semiconductor and Electronic Industries in the Philippines, Inc. President Ernesto B. Santiago said this was a sign of recovery. “Last year’s [March-to-May numbers] were higher compared with this year’s because of unusual circumstances stemming from the tsunami and earthquake that hit Japan, when importers built up their supplies. The June number, however, [shows] that business is doing good and picking up,” he said.

Mr. Terosa concurred, saying: “I think the rise in electronics imports is in preparation for a pickup in production in the third and fourth quarters. It could be a start of a modest turnaround for electronics.”

DBS Bank economist Eugene Leow, however, said the low base effect had distorted electronics figures.

“In level terms, electronics imports have been edging sideways over the last few months, reflecting weak final demand. With the global economy remaining lackluster, a meaningful recovery in the electronics sector is unlikely for now,” he told BusinessWorld in an e-mail.

Transport equipment, the country’s third top import with a 12.5% share of the total, tripled to $639.48 million. This category posted the highest year-on-year growth among the country’s top imports.

“[Transport equipment’s] expansion was brought about by the importation of aircraft and higher import purchases of motor vehicles and parts and accessories,” the NSO said.

Philippine Airlines, the nation’s flag carrier, acquired a Boeing 777-300ER worth $247 million in June. It was the third out of the six Boeing 777s the company plans to acquire for its aircraft reassignment plan.

Upticks were also seen in iron and steel (33.5%), industrial machinery and equipment (30.0%), telecommunication equipment and electrical machinery (18.4%), plastics in primary and non-primary forms (3.9%), and medicinal and pharmaceutical products (0.6%)

Meanwhile, imports of mineral fuels, lubricants and related material, the country’s second top import, shrank by 21.7% to $814.42 million despite an increase in the volume of inward shipments.

The NSO attributed the contraction to lower global market prices. In June, Dubai crude oil averaged $94.50 per barrel, lower than the $107.19 per barrel last year.

Analysts agreed that meeting the government’s growth targets could prove challenging as headwinds continue to batter the global economy.

“The world economy is still sluggish and prices of petroleum products are rising. China is not doing well, too. In general, it would be tough for all countries to meet export and import growth targets for the year,” Mr. Terosa said.

Mr. Leow, for his part, said: “It may be challenging to hit the export growth target of 10%, but robust domestic demand should ensure that import growth stays strong.”

The United States was the top source of imports in June at $803.42 million, or 15.7% of the total. Japan followed with $608.93 million or an 11.9% share. China was third with $545.76 million or a 10.7% share. –LUIS NONITO Q. PASUELO, Researcher, Businessworld