MANILA, Philippines Imports fell 16.8% in October from a year earlier, the slowest annual fall in a year, in what economists said could be a sign of a further improvement in imports in the months ahead.

Data from the National Statistics Office showed that the import bill fell 16.8% to $3.808 billion in October from last year's $4.578 billion. Compared to September's imports worth $3.670 billion, October's imports grew by 3.8%.

For the first 10 months of the year, imports dropped 29% to $35.485 billion from last year's $49.960 billion.

Purchases of electronic parts, which accounted for 37.6% of the total import bill, dropped 11.3% to $1.431 billion in October from the $1.614 billion recorded in the same month last year. This was mainly caused by a 12.9% decrease in semiconductor imports, which had the biggest share of electronics purchases at 27.9%.

Electronic parts are mostly used in the country's exports industry, a bedrock of the economy.

Other key imports during October were mineral fuels, lubricants, transport equipment, industrial machinery, organic and inorganic chemicals, iron, and steel.

Japan remained the country's largest source of imports for the month with a 13.3% share, recording payments worth $506.73 million. This was, however, lower by 16% than last year's $603.54 million.

The United States came in second with $444.87 million or a 11.8% share of the total import bill. US was followed by Singapore (9.2%), Korea (8.1%), and Taiwan (7.2%).

The Philippine central bank expects merchandise imports to slip 17% this year, but grow 13% in 2010, and exports to fall 20% this year and climb 7% next year.

Philippine exports fell 8.3% in October from a year earlier, the first single-digit decline recorded in the past 12 months.

The Philippines clocked up a trade deficit of $138 million in October, bringing the shortfall in the first 10 months of the year to $4.175 billion