By Matthew Miguel L. Castillo, Researcher
The country’s trade-in-goods deficit narrowed by 17.8% yr on yr in January as exports growth moderated while imports declined, the Philippine Statistics Authority reported on Friday.
Preliminary data from PSA showed trade balance in goods — the difference between the values of merchandise exports and imports — reached a $4.05-billion deficit that month, narrower than the $4.93-billion gap recorded in January last yr.
Month on month, January’s trade deficit widened from the revised $3.99-billion gap logged in December 2025.
The country’s trade balance has been in deficit for over a decade or because it posted a $64.95-million surplus in May 2015.
Cid L. Terosa, a senior economist on the University of Asia and the Pacific, said that the narrower annual trade deficit in January was as a result of muted import growth.
“While the worldwide trade environment fostered caution and hesitation amongst importers, the weak domestic economic environment held back stronger demand for capital goods and imports,” Mr. Terosa said in an e-mail.
“The continued use of tariff threats by the US against China, Europe, Canada, and other countries dimmed export prospects in January 2026,” he added.
Outbound shipment of locally made goods grew by 7.9% yr on yr to $7.09 billion in January, slowing down from the 9.6% expansion in the identical month last yr. It was the slowest annual export pace in five months or for the reason that 5.5% growth in August 2025.
By value, export receipts in January were the biggest in three months or for the reason that $7.45 billion logged in October last yr.
Imports, meanwhile, ended two straight months of growth because it fell by 3.1% yr on yr to $11.14 billion in January. This marked its worst annual decline in 14 months or since imports dropped by 3.3% in November 2024.
Import value that month can also be the biggest in three months or for the reason that $11.64 billion October a yr ago.
On Jan. 14, US President Donald J. Trump imposed a 25% tariff on chips used for artificial intelligence (AI), Reuters reported.
Three days later, amid escalating exchanges with European allies, Mr. Trump threatened to set free a wave of tariffs on the bloc until the US buys Greenland.
ELECTRONIC PRODUCTS DRIVE EXPORT
“Robust external demand for electronic products — particularly semiconductors driven by surging AI-related needs — continued to underpin overall export growth [in January],” Chinabank Research said in a note.
Manufactured goods comprised greater than three-fourths of all exports in January with a price of $5.63 billion, growing by 6.6% from $5.28 billion last yr.
Electronic products, which cornered greater than 70% of manufactured goods and greater than half of January’s total exports, expanded by 18.8% yr on yr to $4.01 billion.
Semiconductors, which accounted for the majority of electronic products and greater than 40% of total exports, climbed by 21.6% to $3.07 billion in January.
The USA was the foremost destination of locally made goods in January as exports to the country reached $1.16 billion, accounting for 16.4% of all outbound goods.
It was followed by Hong Kong with $1.12 billion (15.9% share), Japan with $879.73 million (12.3% share), China with $691.80 million (9.8% share), and South Korea with $391.75 million (5.5% share).
Despite the familiar set of export destination countries, Chinabank Research also noted significant growth in exports to the East Asia and European Union economic blocs which reached 22.5% and 11.8% within the month, respectively.
“Renewed uncertainty in US trade policy may further encourage exporters to diversify away from the US market,” it added.
SOFT DEMAND FOR IMPORTS
Raw materials and intermediate goods, which made up the majority of the country’s import bill (34.7% share), dropped by 8% to $3.87 billion in January.
Capital goods, which accounted for 33.9% of the country’s imports, rose by 16% to $3.77 billion.
Imports of consumer goods, meanwhile, fell by 6.2% to $2.24 billion. Mineral fuels, lubricants and related materials also contracted by 25% to $1.21 billion.
By commodity group, importation of electronic products, which accounted for greater than a fourth of total bill in January, went up by 18.6% to $2.99 billion.
Imports of semiconductors jumped by 28.1% to $2.15 billion in January.
China was the highest source of imported goods with 29.2% share value $3.26 billion. South Korea followed with an 11.2% share ($1.25 billion), Japan with 8.3% ($928.05 million), Indonesia with 7.1 ($790.47 million), and the USA with 5.9% ($635.25 million).
WHAT’S NEXT
For the following months, Mr. Terosa expects the country to make the most of the lower global tariffs imposed by Mr. Trump.
“For the reason that global tariff rate at 10% is lower than the speed set last yr, I expect exporters to aggressively push exports in global markets,” he said.
After the US Supreme Court struck down his previous tariff program, Mr. Trump slapped a brand new 10% tariff on all imports for 150 days last week, Reuters reported. Lower than 24 hours later, said he plans to lift this blanket tariff to fifteen%.
Mr. Trump in July last yr imposed a 19% duty on goods from five Southeast Asian countries — the Philippines, Cambodia, Malaysia, Thailand, and Indonesia.
“During this window, US importers may opt to front-load their orders, especially given President Trump’s threat to lift import duties to fifteen%,” Chinabank Research said.
However, Sergio Ortiz-Luis, Jr., president of the Philippine Exporters Confederation, Inc., said that the brand new tariffs place the country and the globe under a renewed “period of uncertainty.”
“We’re in limbo… we have no idea what is going to occur in 150 days, whether the speed shall be returned to 19% or set to fifteen% eventually,” Mr. Ortiz-Luis said in a phone call.
Despite the uncertainty, Mr. Ortiz-Luis said that the federal government targets for imports and exports growth remain within sight.
The federal government’s Development Budget Coordination Committee expects exports and imports to grow by 2% this yr.
He also forecasted the continuing trend of narrowing trade gaps for the months to return.
Moving forward, Mr. Terosa said that export growth could also be maintained above goal by reducing each market and commodity concentration.
“Changes in the worldwide trade environment have made it vital to expand trade relations with as many key trade partners as possible,” Mr. Terosa said.
“The opening of latest markets is more more likely to happen for nontraditional export products. Infrastructure development and greater ease of doing business can induce stronger export activity,” he added.
“The positive external trade position, if sustained, may proceed to supply a welcome buffer for the local economy amid softness in other growth driver,” Chinabank Research said.