By Beatriz Marie D. Cruz, Senior Reporter
THE PHILIPPINES’ trade deficit in goods ballooned to $4.94 billion in June because the boom in artificial intelligence (AI) drove double-digit growth in exports and imports, data from the Philippine Statistics Authority (PSA) showed.
Preliminary data from the PSA showed the trade-in-goods balance — the difference between exports and imports — stood at a $4.94-billion deficit in June, widening by 12.3% from the $4.4 billion recorded in the identical month last 12 months.
Month on month, the trade gap narrowed from the $6.1-billion deficit posted in May.
June saw the smallest trade gap in 4 months or because the $4.01-billion gap in February.
The country’s trade balance has been in deficit for greater than a decade or because the $64.95-million surplus recorded in May 2015.
“Rising global demand for semiconductors and other electronics is increasingly shaping the Philippines’ trade profile,” Chinabank Research said in a commentary.
Merchandise exports jumped by 24.1% to $8.77 billion, a tad slower than the 26.9% increase a 12 months ago but faster than the 8.6% growth in May.
Total outbound sales of Philippine-made goods in June were the best because the series began in 1991.
At the identical time, imports jumped by 19.6% to $13.711 billion in June, faster than the 15.8% increase in the identical month last 12 months but slower than the 28.2% rise in May.
The June import bill was the bottom since April when it hit $13.71 billion.
In the primary half of the 12 months, the trade-in-goods deficit ballooned by 25.85% to $30.81 billion from $24.48 billion last 12 months.
For the January-to-June period, imports jumped by 17.84% to $77.53 billion from $65.79 billion.
Merchandise exports rose by 13.09% to $46.72 billion from $41.31 billion a 12 months ago.
The Development Budget Coordination Committee projects exports and imports to grow by 3% and 5%, respectively, this 12 months.
AI DEMAND
Electronic products, which cornered 59.9% of total exports in June, jumped by 35.2% to $5.25 billion.
“Rapidly escalating demand for AI, Web of Things, and investment in hyperscale data centers fueled strong growth of components and semiconductors,” the Department of Trade and Industry said in a statement.
Semiconductor exports, which accounted for the majority of electronic products, rose by 33.4% in June to $3.85 billion.
“Semiconductors continued to underpin the strong exports performance. The strong growth got here despite near-term headwinds reminiscent of ongoing warehouse congestion, which disrupted production schedules, raised logistics and storage costs, and put pressure on exporters’ delivery commitments,” Chinabank Research said.
Exports of mineral products, which made up 4.7% of total exports in June, slumped by 17.7% to $414.85 million.
In June, the US was the highest destination of Philippine-made goods with a worth of $1.76 billion or 20.1% of the full.
This was followed by Hong Kong with $1.34 billion (15.3%), China with $1 billion (11.4%), Japan with $990.16 million (11.3%), and Singapore with $508.18 million (5.8% share).
Meanwhile, imports of raw materials and intermediate goods jumped by 53.4% to $5.89 billion in June, accounting for 42.9% of the full import bill.
Imports of capital goods declined by 5.5% to $3.62 billion, making up 26.4% of June imports.
By commodity group, electronic goods posted the most important import value in June at $4.77 billion, up 82.9% from $2.61 billion in the identical month last 12 months. Electronic products accounted for 34.8% of imports.
Semiconductor imports, which made up 27.4% of imported electronic goods, greater than doubled (105.4%) to $3.76 billion.
“Imports of materials for electronic equipment manufacturing soared (+227.9%), raising their share of total imports to 18.3% from 6.7% a 12 months earlier. This underscores the country’s growing participation in AI-related and electronics supply chains,” Chinabank Research said.
Imports of mineral fuels, lubricants and related materials, which accounted for 11.8% of June imports, rose by 6.3% to $1.62 billion.
“The true engines of the surge in imports were higher global oil prices, transportation costs, and other logistics expenses because of the supply-chain disruptions spawned by the Middle East crisis,” Francisco Cid L. Terosa, a former dean on the University of Asia and the Pacific School of Economics, said in an e-mail.
China remained the country’s top source of imported goods in June with $4.35 billion or 31.7% of the full import bill.
Republic of Korea followed with $1.78 billion (13% share), Japan with $919.13 million (6.7%), Indonesia with $912.63 million (6.7%), and the US with $706.7 million (5.2%).
Looking ahead, export growth will probably be driven by the upcoming AI hub in Tarlac under the US-led Pax Silica initiative, which is anticipated to spice up the Philippines’ shipments of higher-value semiconductors, Chinabank Research said.
“Within the medium term, we predict that the Pax Silica industrial hub could significantly strengthen the Philippines’ role in the worldwide technology industry by supporting exports of higher-value semiconductors, advanced manufacturing, and AI-related infrastructure,” it noted.
Nevertheless, concerns over the potential effect of the AI hub on water and energy resources ought to be addressed to make sure sustainable economic development, Chinabank Research said.