Trade gap narrows to nine-month low in November

THE PHILIPPINES’ trade deficit in goods narrowed further in November as export growths quickened year on year, the Philippine Statistics Authority (PSA) reported on Friday.

Preliminary data from the PSA showed the country’s trade-in-goods balance — the difference between exports and imports — stood at a shortfall of $3.51 billion in November, 28.8% lower than the revised $4.94-billion gap a year earlier.

Month on month, the trade gap shrank from the revised $4.19-billion deficit in October.

The latest figure was the narrowest trade deficit in nine months or since $2.97-billion imbalance in February.

In the January-to-November period, the trade deficit narrowed to $45.2 billion, down 9.3% from the $50.18-billion gap in the same period last year.

The country’s trade balance has remained in deficit for over a decade or since the $64.95-million surplus recorded in May 2015.

Exports of Philippine-made goods rose by 21.3 % year on year in November to $6.91 billion, faster than the 20.3% increase in October and reversing the 8.6% dip in November 2024.

It was the fastest pace for exports in five months or since the 26.9% growth in June.

However, the November export figure also marked a decrease from last month’s $7.45 billion.

Year to date, exports increased by 14.5% to $77.39 billion.

Meanwhile, merchandise imports in November weakened by 2% year on year, continuing from the revised 3% drop in October and the 3.3% drop a year earlier.

Imports in November totaled $10.42 billion, the lowest in nine months since $9.76 billion in February.

During the January-to-November period, imports rose by 4.1% to $122.59 billion.

The Development Budget Coordination Committee anticipates exports to decline by 2% this year, while imports are expected to grow by 3.5%.

Cid L. Terosa, senior economist at University of Asia and the Pacific, said that greater demand for semiconductors, US tariff exemptions for agricultural products, higher remittances during “ber” months, and effects of “front-loaded” imports helped narrow the trade deficit.

US President Donald J. Trump issued an executive order in November exempting certain food products from increased US tariffs, effective Nov. 13.

The exempted items included bananas, coconuts, coffee, pineapples, and beef.

“Exports of electronic products and semi-conductors can be related to holiday-related spending worldwide,” he said in an email message.

Electronic products continued to be the country’s top export commodity, climbing by 50.6% to $4.19 billion and accounting for more than half of total exports.

Manufactured goods made up the largest portion of total export receipts, up by 29.8% year on year to $5.76 billion in November.

However, exports of mineral products contracted by 42.1% to $325.98 million in November. Petroleum products inched up by 2.6% to $25.95 million.

Sergio R. Ortiz-Luis, Jr., president of the Philippine Exporters Confederation, Inc., said in a phone call interview in Filipino that the narrowing trade deficit could be attributed to the ban on agricultural imports and stronger-than-expected semiconductor exports.

Philippine President Ferdinand R. Marcos, Jr. extended the country’s rice import ban last November — first imposed on Sept. 1 to counter falling palay prices — through yearend last November to help stabilize farmgate prices for unmilled rice.

Additionally, the Department of Agriculture announced that the sugar import ban will be extended until December 2026.

However, Mr. Ortiz-Luis said that export growths were minimal if comparing month-on-month changes as businesses monitored Mr. Trump’s tariff strategy.

“Many buyers from the US are holding back. So, they’re waiting to see what will happen. Fortunately, it came out last month that they won’t be affected that much,” regarding possible tariffs on semiconductors.

Hong Kong was the main destination of Philippine-made goods in November, accounting for 16.9% or $1.17 billion of total export sales. This was followed by the US, with a 16.8% share in total exports or $1.16 billion, Japan with a 12.6% share or $872.12 million, China with a 10.1% share or $698.37 million and the Netherlands with a 4.9% share or $338.18 million.

Union Bank of the Philippines Chief Economist Ruben Carlo O. Asuncion said in an email message that the peso’s slide toward record lows likely affected imports.

“A weaker currency raises the peso cost of imports, discouraging marginal purchases, which aligns with the slight decline in November imports. Conversely, exporters benefit from higher peso-denominated revenues, reinforcing the incentive to ship goods abroad.”

The peso hit what was then a historic low of P59.17 against the US dollar on Nov. 12, according to data from the Bankers Association of the Philippines, before falling further to P59.22 on Dec. 2.

Mr. Asuncion added that the peso’s drop could cause a J-curve effect, widening the trade deficit at first if import volumes stay sticky, but later shrinking over time as pricier imports reduce demand and exporters gain an edge.

Raw materials and intermediate goods, which made up the bulk of the country’s total imports in November, were down by 1.8% to $3.94 billion.

Capital goods imports rose by 7.8% to $3.15 billion in November, while consumer goods fell by 5.6% to $2.22 billion.

Imports of mineral fuels, lubricants and related materials also declined by 18.9% to $1.06 billion.

China continued to be the top source of imports, accounting for 27.8% or $2.9 billion of the total import bill in November.

It was followed by South Korea with a 9.4% share or $978.91 million, Japan with 7.7% or $806.17 million, Indonesia with 7.7% or $805.07 million and the US with 5.8% or $609.62 million.

Looking forward, Mr. Asuncion said that the global semiconductor cycle and China’s demand and supply chain could heavily impact Philippine exports, while peso’s trajectory and BSP’s policy stance will affect import costs and exporter margins.

“Diversifying exports beyond electronics and improving logistics efficiency will be critical to sustaining a healthier trade position.”

Mr. Ortiz-Luis added that domestic corruption controversies could undermine business confidence, eroding buyer trust and affecting trade.

Meanwhile, Mr. Terosa said that geopolitical risks could spur volatility in global markets, leading to oil price instability, supply shortages, and price surges.— Pierce Oel A. Montalvo