MANILA -- An economist for the Tan-led Philippine National Bank (PNB) forecasts the Philippine peso to remain resilient despite a slight deterioration in the country’s trade deficit.
In a report, PNB economist Jun Trinidad expressed his observation that the USD3.49-billion trade deficit last April is still better-than-expected against the previous month’s USD3.2-billion deficit.
He explained that the country’s exports to the US and China registered strong gains despite the on-going US-China trade issues and its impact on global trade.
Data from the Philippine Statistics Authority (PSA) show that exports rose by 0.4 percent year-on-year, a turn-around from year-ago’s -1.9 outturn.
Imports, on the other hand, contracted by 1.9 percent as against the 28.6 percent rise in April 2018.
Last March, exports contracted by 2.5 percent while imports grew 7.8 percent. Trade deficit stood at USD 3.14 billion.
Trinidad said the rise of the country’s trade deficit in the fourth month this year relative to the previous month’s amount “is unlikely to nudge PHP (the Philippine peso) to a weaker trading range”.
“However, our extrapolation of the monthly trade data continues to show a worsening trade deficit outlook later in 2H19 peaking at roughly USD4 billion/month that coincides with the fiscal spending ‘catch-up’ and its likely lift to broad-based demand,” he said.
The government has set in motion a catch-up plan on spending in view of the delayed approval of this year’s national budget, which affected domestic growth in the first quarter of the year.
President Rodrigo R. Duterte signed the PHP3.7-trillion national budget only last April.
Growth of the economy, as measured by gross domestic product (GDP), slipped to 5.6 percent in the first three months of this year, ending the six percent level output in recent years.
Economic managers attributed this to the delay in the national budget's approval, noting that it prevented the government from implementing its spending program to sustain the economy’s robust output.
Trinidad forecasts the trade deficit to be neutral for the local currency in the near term.
“We remain bearish on the trade gap and its PHP impact in 2H19,” he added.
On Thursday, the peso ended at 51.865 against the US dollar, almost unchanged compared to its 51.85 close last Tuesday.
There was no trading on Wednesday due to the Independence Day holiday. (PNA)
