Exports Improve, But Higher Import Commodity Bill May Keep Trade Deficit Wide

Philippines August trade data was better than expected. The trade deficit printed at -$4128mn, versus -4300mn forecast (-$4199mn was the prior outcome). This largely reflected an upside surprise on export growth to 4.2% (-2.0% forecast and -0.9% prior). This is the best export growth print since November last year. Import growth was -13.1% y/y (forecast -14.3% and -15.2% prior).

• Exports were up 8.7% in m/m terms. Manufactures (+8.3%) and electronic (+6.1%) exports both recorded decent m/m rises. Manufactures is early 82% of export and a key driver of the overall trend.
• This may be the start of an improved export trend for the Philippines, given signs of modestly better trends elsewhere (South Korea and Taiwan).
• For PHP this is a positive, all else equal, but a lot will also depend on imports from a trade deficit standpoint. Raw materials (+3.9%) and fuel (+28.4%) imports both rose in m/m terms amid a firmer commodity price backdrop.
• This suggests only limited upside in terms trade deficit improvement, at least in the near term.