Philippines Posts Record Trade Deficit as Machine Imports Rise

(Bloomberg) -- The Philippines posted a record trade deficit in November as imports from machines to steel and iron climbed while exports faltered, adding pressure on the currency.

The trade deficit was $3.8 billion, preliminary data from the Philippine Statistics Authority showed on Wednesday. That is the widest since at least 1980, according to data compiled by Bloomberg.

President Rodrigo Duterte’s $180 billion infrastructure program is boosting demand for imports of machines and raw materials with the central bank forecasting a third consecutive annual current-account deficit in 2018, removing a key pillar of support for the currency.

Click to read: Philippines Forecasts Wider Current Account Deficit in 2018

“2018 is supposed to be a banner year for government infrastructure projects,” said Emilio Neri, an economist at Bank of the Philippine Islands in Manila. “It should again translate to further expansion in capital importation. The adjustment that will follow is on the currency.”

The peso fell 0.1 percent to 50.34 against the dollar as of 9:53 a.m. in Manila. The currency is down 1.7 percent in the past 12 months, the worst performer in Asia, according to data compiled by Bloomberg.

Other Details

• Exports rose 1.6 percent from a year ago versus estimate of 9 percent. That was the slowest pace since a contraction in November 2016, according to data compiled by Bloomberg
• Imports climbed 18.5 percent from a year ago versus estimate of 9.7 percent. That was the fastest pace since December
  • Imports of telecommunication equipment and electrical machinery gained 32.8 percent
  • Imports of iron and steel rose 26.4 percent
• Trade deficit with China was $1.2 billion

“This is not alarming. In fact this is something that is expected by the market and even the central bank governor asked to expect bigger overall deficit,” said Michael Enriquez, chief investment officer at Sunlife of Canada Philippines Inc. “It’s just a sign that the infrastructure push of the government is gaining traction and corporations are really bracing up for expansion. We can expect more of the same this year.”

--With assistance from Siegfrid Alegado

To contact the reporter on this story: Ditas Lopez in Manila at dlopez55@bloomberg.net.

To contact the editors responsible for this story: Nasreen Seria at nseria@bloomberg.net, Karl Lester M. Yap

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