Domestic trade declines in second quarter

The domestic trade in goods declined by an annual 36.2% in the second quarter, the Philippine Statistics Authority (PSA) said.

Preliminary data from the PSA’s Commodity Flow in the Philippines report showed the value of goods traded in the three months to June dropped by a third to P171.54 billion from P268.7 billion in the same period in 2022.

Quarter on quarter, domestic trade fell by 35% from P265.51 billion in the first quarter this year.

The second-quarter decline was a reversal from the 29.9% growth in the same period in 2022, and the 14.5% growth in the previous quarter.

In terms of volume, domestic trade inched up to 5.79 million tons in the second quarter from 5.73 million tons in the same period in 2022. Quarter on quarter, it fell by 10% from 6.45 million tons in the January-to-March period.

Commodity flow includes all goods transported by water, air, and rail transport. Nearly all (99.96%) of the commodities were transported through water.

ING Bank N.V. Manila Senior Economist Nicholas Antonio T. Mapa attributed the decline due to base effects.

“We’re now likely seeing more normalized levels of trade. This mirrors the negative quarter-on-quarter gross domestic product (GDP) growth posted in the second quarter suggesting economic activity is slowing,” Mr. Mapa said.

In the second quarter, GDP expanded by 4.3% in the second quarter, weaker than the 6.4% growth in the first quarter and the 7.5% print a year ago. This was also the slowest in over two years.

Quarter on quarter, GDP shrank by 0.9% in the April-to-June period, a reversal of the 1.1% growth in the first quarter.

PSA data showed the trade value of eight out of the 10 commodity categories fell year on year in the second quarter.

The trade value of animal and vegetable oils, fats and waxes recorded the biggest annual decline (-90.8% from -47.2%), followed by beverages and tobacco (-82.9% from 4.1%), miscellaneous manufactured articles (-67% from 14.6%), chemicals and related products (-62.1% from 20.3%), food and live animals (-58.5% from 14.3%).

Other categories that recorded declines were machinery and transport equipment (-26.1% from 27.4%), manufactured goods classified chiefly by material (-20.6% from 1.1%), and commodities and transactions not classified elsewhere in the PSCC (-19.7% from -1.5%).

Meanwhile, the trade value of crude materials (inedible except fuel) jumped by 171.2% in the second quarter, while mineral fuels, lubricants and related materials rose by 13.2%.

In the second quarter, machinery and transport recorded the biggest value of traded commodities at P61.51 billion, but this was 26% lower than the P83.27 billion recorded a year ago.

Central Visayas was the top source and destination of traded commodities in the April-to-June period with total outflows amounting to P95.61 billion and inflows worth P57.97 billion.

Central Visayas also had the largest trade balance in the second quarter with P37.64 billion, followed by Central Luzon with P11.43 billion and Bicol with P5.81 billion.

Three regions had the biggest negative trade balance, led by Caraga (-P24.03 billion), Northern Mindanao (-P15.45 billion) and Eastern Visayas (-P6.38 billion).

Source: Business World

Q1 domestic trade value, volume climb

The domestic trade in goods grew by 46.7% year on year in the first quarter to P199.72 billion, the Philippine Statistics Authority (PSA) said on Tuesday.

However, this amount was smaller than P283.71 billion in the fourth quarter of 2022, preliminary data from the PSA’s Commodity Flow in the Philippines report showed.

The first quarter’s 46.7% annual growth in trade value was slower than the 59.9% expansion in the fourth quarter of 2022.

By volume, domestic trade jumped by 56.7% to 5.34 million tons in the January-to-March period, from 3.41 million tons in the same period a year ago.

But this was lower than 6.14 million tons logged in the fourth quarter last year.

Commodity flow includes all goods transported by water, air, and rail transport, with shipping accounting for the bulk of the commodities.

Union Bank of the Philippines Chief Economist Ruben Carlo O. Asuncion said that the domestic trade performance mirrors the country’s slower annual economic output in the first quarter.

“Strong robust domestic demand continued and has kept domestic trade elevated for [first quarter].

Purchasing Managers’ Index numbers in the first quarter do support this positive trend,” Mr. Asuncion said.

The Philippines’ gross domestic product (GDP) expanded by 6.4% in the first quarter, the slowest in eight quarters or since the 3.8% decline in the first quarter of 2021.

Meanwhile, ING Bank N.V. Manila Senior Economist Nicholas Antonio T. Mapa, said in an e-mail that the “year-on-year numbers continued to benefit from base effects.” Mobility curbs were tightened in the first quarter of 2022 due to an Omicron-fueled spike in coronavirus cases.

All of the 10 commodity categories monitored by the PSA showed annual expansion in trade by value. This was led by beverages and tobacco (83.7%); food and live animals (67.6%); chemicals and related products (59.7%); manufactured goods classified chiefly by material (46.4%); and mineral fuels, lubricants and related materials (40.8%).

Annual growth was also recorded for commodities of machinery and transport equipment (40.3%); crude materials, inedible except fuel (35.5%); miscellaneous manufactured articles (22.1%); animal and vegetable oils (8.9%); and commodities and transactions not classified elsewhere in the Philippine Standard Commodity Classification (7.9%).

The machinery and transport equipment had the largest value of traded commodities amounting to P68.24 billion, accounting for 34.2% of the total. It was followed by food and live animals at P51.10 billion (25.6%) and manufactured goods classified chiefly by material at P28.77 billion (14.4%).

By value, Central Luzon recorded the largest trade surplus in the first quarter amounting to P11.25 billion, after recording P11.95 billion in outflows and P700.07 million in inflows.

Western Visayas accounted for the most goods traded by value with an outflow value of P44.70 billion.

Central Visayas posted the largest inflow value of P44.33 billion.

The trade balance is the difference between the outflow value and inflow value. A surplus happens when trade outflows exceed inflows, while the opposite occurs in deficit.

Analysts expect the growth of the domestic trade to slow in the second quarter.

“With the economy now open, we can say that activity will expand, however, we note a slowing pace of gains as high inflation and elevated borrowing costs begin to bite,” Mr. Mapa said.

While there will be a slowdown, Mr. Ricafort said demand will remain strong and lift domestic trade. He noted the anticipated disinflation and a pause in the Bangko Sentral ng Pilipinas’ monetary tightening bodes well for domestic trade prospects in the next few months.

BSP Governor Felipe M. Medalla earlier this month signaled an extended pause on interest rates. At its May 18 meeting, the Monetary Board decided to keep its policy rates unchanged.

The BSP’s next policy-setting meeting is on June 22.

Source: Business World