THE Philippines’ trade-in-goods deficit widened yr on yr in February as imports rose by double-digits while exports eased, the Philippine Statistics Authority (PSA) reported on Friday.
Analysts said that February trade data suggests that recovery stays intact but vulnerable to external shocks on account of the rising energy prices from the Middle East conflict.
Preliminary data from the PSA showed that the country’s trade balance — the difference between exports and imports — reached a $3.68-billion deficit in February, 23.1% wider than the $2.99-billion gap posted a yr earlier.
Month on month, the trade gap narrowed from the revised $4.27 billion posted in January.
February saw the smallest trade balance in nine months or because the $3.64 billion recorded in May 2025.
Merchandise imports climbed by 12.6% yr on yr in February 2026. It was faster than the two.1% expansion a yr ago but a turnaround from the 1% drop in January.
The import bill for that month reached $11.01 billion, greater than the $9.78 billion in February 2025.
Then again, total outbound sales of Philippine-made goods went up by 8% yr on yr in February to $7.33 billion, slower than the 12.8% expansion in February 2025 and eight.7% gain a month earlier.
It was the slowest pace for exports in six months or because the 5.5% growth in August 2025.
For the primary two months of the yr, the trade-in-goods deficit widened to $7.96 billion, 0.1% higher than the $7.95 billion-gap within the January-February period last yr.
Outbound sale of products expanded by 8.3% to $14.47 billion in the primary two months of 2026, while imports rose by 5.3% to $22.43 billion.
The Development Budget Coordination Committee (DBCC) projects 6% and 5% growth in exports and imports, respectively, this yr.
IMPORTS REBOUND
Chinabank Research said in a research note that imports rebounded through near-term growth will largely be driven by oil price effects because the demand for capital goods surged even before the Middle East conflict escalated.
It added that surging oil prices will likely push up total imports and widen the trade deficit within the near term.
“Nevertheless, softer demand on account of supply shortages will correct this price-driven import growth by the second half of the yr,” it said.
Ruben Carlo O. Asuncion, chief economist at Union Bank of the Philippines said that the trade deficit widening is on account of the double-digit growth in imports, driven by higher purchases of electronic products, capital goods, fuel, and intermediate inputs.
He added that the imbalance mechanically widened the trade gap at the same time as export earnings improved.
“The faster expansion reflects a mixture of firm domestic demand, ongoing capital spending, and better global prices, particularly for energy and industrial inputs,” he said in an e-mail.
Imports of raw materials and intermediate goods in February fell by 13.7% to $3.22 billion. These accounted for 29.3% of the whole February import bill.
In February, imports of capital goods grew by 55.5% to $4.15 billion, while the imports of consumer goods also jumped by 10.4% to $2.14 billion.
Imports of mineral fuels, lubricants and related materials increased by 3.8% yr on yr to $1.46 billion.
China was the highest source of imports, accounting for 28.4% of the whole or $3.12 billion of the whole import bill in February. It was followed by South Korea with an 12.5% share or $1.37 billion and Japan with 8.5% or $933.36 million.
EXPORT GROWTH EASE
“On the export side, growth continued to be supported by the electronics sector, which stays the country’s largest export contributor, alongside gains in machinery and gold,” Mr. Asuncion said.
He added that the modest growth on exports is on account of base effects “as February 2025 already posted double‑digit expansion, and lingering softness in global demand in chosen non‑electronics products.”
For Chinabank Research, even with the 8% decent growth, the conflict within the Middle East could disrupt supply chains.
“Exports face headwinds from supply chain disruptions and a possible slowdown in global economic activity. This might temper earlier gains from lower-than-expected US tariffs,” it said.
Electronic products, which made up almost three-fourths of manufactured goods and greater than half of total exports in February, grew by 20.5% to $4.23 billion.
With 43.7% share from semiconductors of the whole exports, it jumped by 26.9% to $3.20 billion.
Exports of mineral products also expanded by 52.7% to $615.26 million in February, while petroleum products declined by 34.5% to $16.54 million.
America was the essential destination of Philippine-made goods in February, accounting for 19.3% or $1.41 billion in export sales. Other top export destinations were Hong Kong, which accounted for 16% or $1.17 billion and Japan, which accounted for 13.5% or $986.44 million.
Chinabank Research added that exports to the US—the country’s largest export market—surged by 42.9%. The ten% global US tariff currently in place, lower than the reciprocal tariffs that were struck down by the US Supreme Court, could help improve US demand.
“Still, market diversification was evident as US trade policy stays highly uncertain. Shipments to East Asia rose by 14.2% and the EU by 9.5%,” it said.
MIDDLE EAST CONFLICT
Chinabank also said that the conflict within the Middle East poses a big risk to the country’s trade performance this yr.
For Mr. Asuncion, if these geopolitical tensions within the Middle East persists, essentially the most immediate transmission channel could be through higher global oil prices, which could raise the peso value of fuel and transport‑related imports.
“This will again put upward pressure on import values and the trade deficit within the near term. Higher fuel costs could also push up production and logistics expenses, with possible spillovers to export costs and margins.”
He added that the March trade performance will depend not only on oil prices but in addition on global electronics demand, exchange rate movements, supply chain conditions, and seasonal trade patterns.
Moreover, any easing in shipping disruptions or currency support from remittance and portfolio inflows could partly cushion the impact on external trade.
“In the approaching months we could see imports rise further for mineral fuels with crude oil prices surging. Other energy costs may also likely increase. We could also see imports of capital goods and raw materials take a back seat as investor sentiment takes successful,” Nicholas Antonio T. Mapa, chief economist and markets strategist at Metropolitan Bank & Trust Co., said in an e-mail.
He added that one development that’s being monitored is the import of materials utilized in electronics exports.
“It’s now negative which suggests that corporations are not any longer importing aspects of production for our mainstay electronics. Thus, we could eventually see exports face challenges in the approaching months.”
GOVERNMENT EFFORTS
Even when geopolitical risks remain elevated, the country can still work toward the DBCC’s export and import growth targets through a combination of policy support and structural measures, said Mr. Asuncion.
“On the export side, improving trade facilitation, easing logistics bottlenecks, and accelerating investments in manufacturing, electronics, and high‑value agro‑exports might be crucial. On the import side, continued emphasis on productive imports, particularly capital goods that expand supply capability, will help support sustainable growth relatively than widen vulnerabilities,” Mr. Asuncion added.
“From a policy perspective, government efforts that might help ease the impact of prolonged external shocks include energy diversification, targeted fuel support during price spikes, strengthening local supply chains, and maintaining macroeconomic stability,” he said.
Mr. Asuncion also said that Monetary and monetary coordination may also be vital to maintain inflation expectations anchored while supporting growth and external competitiveness. — Lourdes O. Pilar