By Joann Villanueva/PNA
MANILA — An economist of ING Bank Manila has forecast a single-digit growth for Philippine imports in 2019, down from last year’s 13.4 percent expansion, factoring in the possible impact of the 175 basis points increase in the Bangko Sentral ng Pilipinas’ (BSP) key rates last year.
Citing Philippine Statistics Authority (PSA) data, ING Bank Manila senior economist Nicholas Mapa noted the “blip” in the country’s import growth at -9.4 percent last December.
He explained that consumer imports were hit by the one-off effect of the vehicle buying surge in late 2017 ahead of the implementation of the excise tax on cars under the Tax Reform for Acceleration (TRAIN) law.
He, however, noted that even the importation of capital goods and raw materials posted declines in the last month of the year. “If this continues, this could show that recent aggressive tightening by the BSP is starting to bite into investment appetite, hampering the nascent investment-driven growth story that we’ve witnessed of late,” he said.
“The recent tightening cycle of the BSP may hinder this growth to some extent while fuel imports will also likely be smaller in 2019, leading us to expect only single-digit growth in the import bill for the year,” he said.
Amid the contraction of imports last December, full-year growth stood at 13.4 percent, with capital goods rising by 12.9 percent year on year and raw materials, 13.8 percent. The strong imports growth was due to higher domestic demand as requirement of the domestic economy continues to rise due in part to the government’s greater focus on improving the country’s infrastructure.
On the other hand, exports contracted by 12.3 percent last December while full-year contraction is 1.8 percent, both of which was due to negative developments overseas. Thus, the trade gap in the last month of the year amounted to USD3.75 billion.
Meanwhile, Bangko Sentral ng Pilipinas (BSP) Deputy Governor Diwa Guinigundo said it is “difficult to establish” that the negative growth in the country’s external trade in the last month of 2018 was due to the series of interest rate increases implemented by the central bank.
He explained that “normally when market interest rate rise(s), credit for various purposes, including imports may be adversely affected.” Thus, “more observations are needed,” he added.
