September imports at 4-month high

Posted at 11/27/12 9:19 AM

MANILA - Philippine imports climbed 3.6 percent to $5.27 billion in September from a year earlier to post its highest value in four months, but the country's top electronics shipments remained weak on slow external demand.

The Southeast Asian country posted a trade deficit of $483 million in September, bringing the cumulative deficit in the first nine months to nearly $6 billion, the statistics office said.

Radhika Rao, economist at Forecast PTE, Singapore, said, "Modestly positive import headline was along our expectations. As can be observed in the regional data, the destocking process appears to have run its course and local manufacturers have begun to build inventories, possibly on anticipation of upcoming holiday demand."

"The ongoing public investment has also underpinned capital imports so far in the year, which we reckon will weigh on the trade account heading into end-year. Overall current account nonetheless will draw strength from remittances and capital flows."

China was the country's top import source in September, accounting for 12.3 percent of total purchases, followed by United States with 10.9 percent, and Taiwan with 9.8 percent.

Imports from East Asia, the top import source by economic bloc accounting for 40.5 percent of the total, rose 14.6 percent in September from a year earlier.

Imports from Southeast Asia the second top economic bloc were nearly flat from a year earlier.

The country's largest imports are inputs used by the semiconductor and electronics industry, also the biggest export sector and a major contributor to the economy. Apart from electronic parts, other top imports in September were mineral fuels, transport equipment, industrial machinery, and cereals.

The Philippines imports nearly all its crude oil requirements.

The government has trimmed its imports growth forecast for this year to 12 percent from 15 percent as manufacturers feel the brunt of the global economic slowdown. Imports in the first nine months edged up 0.5 percent.

Exports, which account for about two-fifths of the country's GDP, jumped 22.8 percent in September from a year earlier as electronics rebounded after five straight months of contraction.

The Philippine central bank, which will hold its last policy meeting this year on Dec. 13, cut its key rate by 25 basis points to a new low of 3.5 percent in October to help manage capital inflows that have kept the peso rising against the U.S. dollar and to boost growth amid weak external demand.

Philippine economic growth likely defied the global downdraft and picked up modestly in the third quarter, helped by strong domestic demand and a late spurt in exports, but a December rate cut may still on the cards to contain the peso's strength.

The government will release the third-quarter GDP data on Wednesday.