Import Uptick

PHILIPPINES - In Brief 25 Sep 2013 by Romeo Bernardo

---

The statistics bureau reported today an 8.7% increase in July imports due largely to a 30% gain in imports of electronics materials.  This supports feedback we received earlier from local electronics makers who reported seeing improving export sales.  July total import growth is the highest so far this year.  However, on a cumulative year-to-July basis imports remain lower this year relative to last year by about 2%.It may be noted that the drop in import value is the main reason for the much higher current account in the first semester.  The BSP release last Friday showed a balance of $5.6 billion in the current account from January to June, more than double the level of the prior year and already 80% of its $7 billion 2013 forecast.  Nevertheless, while we expect continuing robust balances, a slower accumulation of surpluses in the current account can be expected as the trade gap widens ahead, due in part to seasonal imports.Since the US Fed’s no taper decision, local financial markets have remained volatile with the mood swinging from a brief period of exuberance to more caution recently.  Nevertheless, we maintain the view that the healthy external position, strong economic growth and sufficient macro policy room place the Philippines in a good position to weather an eventual Fed tapering move.  We are in fact more concerned about how unresolved issues in local governance, especially in connection with possible fiscal spending restraint due to the pork barrel scandal, will affect the economy's future growth.