Lowest contraction since October 2008

MANILA - Just like exports, Philippine merchandise imports began to show signs of recovery in June as it posted the lowest annual contraction since October last year.

Data from the National Statistics Office (NSO) showed that imports fell 22.8% to $4.108 billion in June, better than the 24.3% drop recorded in the previous month. Since November 2008, the country's imports had been declining at a range of 30% to 38%.

Purchases of electronics parts, a key component in the country's export sector, dropped 20.3% to $1.390 billion from $1.743 billion recorded in the same period last year. This was mainly caused by a 21.2% decrease in semiconductor imports, which took the biggest share of electronic products at 25.7%.

Other key imports included mineral fuels, cereal and cereal preparations, transport equipment, industrial machinery and equipment, organic and inorganic chemicals, iron, and steel.

Japan was the country's largest source of imports in June with an 11.9% share, recording payments worth $486.92 million. This was, however, a 21.2% decline from the same month last year.

The United States, who was the country's top source last month, came in second with $458 million or 11.2% of total imports, followed by China ($319.74 million), Taiwan ($319.12 million), and Singapore ($294.16 million).

Narrowing trend

Economist Simon Wong of Standard Chartered Bank said the narrowing trend in imports drop will continue throughout the year. He said, however, that imports may still post a double-digit decline in July.

"The improvement has been quite mild so far, but we do expect that to accelerate in the coming months as the latest round of numbers from the United States and Europe clearly point to a bottoming in (the decline in) global demand," he said. For the second quarter, Wong said the country's gross domestic product is likely to reach -0.5%.

The government is expecting imports to fall between 8% and 12% this year, better than an earlier estimate of a 12% to 14% contraction. Exports, on the other hand, are seen to drop between 13% and 15%. With a report from Reuters