By Beatriz Marie D. Cruz, Senior Reporter
THE PHILIPPINES’ trade deficit in goods ballooned to $4.94 billion in June as 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 same month last year.
Month on month, the trade gap narrowed from the $6.1-billion deficit posted in May.
June saw the smallest trade gap in four months or since the $4.01-billion gap in February.
The country’s trade balance has been in deficit for more than a decade or since 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 year ago but faster than the 8.6% growth in May.
Total outbound sales of Philippine-made goods in June were the highest since the series began in 1991.
At the same time, imports jumped by 19.6% to $13.711 billion in June, faster than the 15.8% increase in the same month last year but slower than the 28.2% rise in May.
The June import bill was the lowest since April when it hit $13.71 billion.
In the first half of the year, the trade-in-goods deficit ballooned by 25.85% to $30.81 billion from $24.48 billion last year.
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 year ago.
The Development Budget Coordination Committee projects exports and imports to grow by 3% and 5%, respectively, this year.
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, Internet 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 bulk of electronic products, rose by 33.4% in June to $3.85 billion.
“Semiconductors continued to underpin the strong exports performance. The strong growth came despite near-term headwinds such as 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 United States was the top destination of Philippine-made goods with a value of $1.76 billion or 20.1% of the total.
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 total 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 largest import value in June at $4.77 billion, up 82.9% from $2.61 billion in the same month last year. Electronic products accounted for 34.8% of imports.
Semiconductor imports, which made up 27.4% of imported electronic goods, more 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 year 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 due to the supply-chain disruptions spawned by the Middle East crisis,” Francisco Cid L. Terosa, a former dean at 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 total 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 United States with $706.7 million (5.2%).
Looking ahead, export growth will be driven by the upcoming AI hub in Tarlac under the US-led Pax Silica initiative, which is expected to boost the Philippines’ shipments of higher-value semiconductors, Chinabank Research said.
“In the medium term, we think that the Pax Silica industrial hub could significantly strengthen the Philippines’ role in the global technology industry by supporting exports of higher-value semiconductors, advanced manufacturing, and AI-related infrastructure,” it noted.
However, concerns over the potential effect of the AI hub on water and energy resources should be addressed to ensure sustainable economic development, Chinabank Research said.
