Trade Deficit Widens, Higher Imports Driven By Raw Materials & Capital Goods

The Philippines April trade deficit was wider than forecast. It printed at -$4761mn, versus -$3700mn expected. The deficit is back to late 2023 lows, but we remain above the Q3 2022 trough point at -$6000mn.

• Both exports and imports surprised on the upside relative to expectations. Export growth was +26.4% y/y (+13.0% forecast and -7.3% prior), while imports were +12.6%y/y (versus -2.5% forecast and -17.7% prior).
• The deterioration in the trade deficit comes despite a better terms of trade proxy backdrop (per Citi), although the metric remains in negative territory.
• In terms of the detail, exports rose 1.4% m/m, as a 0.4% rise in manufacturing offset a small fall in electronic exports. In y/y terms export growth is at its highest since 2021, although base effects clearly helped.
• On the import side, we surged 14.7% in m/m terms. Raw material imports surged 28.6% in the month, which was one of the largest contributors.
• Capital good imports and consumer good imports were also up firmly for the second straight month, suggesting some resilience in the domestic demand backdrop.