MANILA -- The Philippines' trade deficit narrowed to a three-month low in December as imports tumbled for the first time in a year, dented by double-digit drop in shipments of capital and consumer goods.
Trade deficit in December dropped 5.5 percent to $3.75 billion, data from the Philippine Statistics Authority showed on Tuesday, the lowest in 3 months when the gap had touched $3.72 billion in September. Full-year trade deficit came in at $41.44 billion.
In December, imports dived 9.4 percent to $8.5 billion, their largest decline in more than 6 years.
Imports of capital goods such as transport equipment, telecommunications equipment and electrical machinery plunged 33.3 percent and 5.5 percent, respectively.
ING economist Nicholas Mapa said he expects to see a rebound on imports of consumer and capital goods in the coming months as the government pushes ahead with its infrastructure program.
"I still expect trade gap to remain relatively wide, $3.25 billion to $3.5 billion for every month. You are still going to import capital machinery. Your raw materials, your construction materials for 'Build, Build, Build'," Mapa said.
The drop in consumer imports was not a surprise as consumers front-loaded car purchases ahead of the implementation of higher taxes on certain types of vehicles last year, he added.
Exports shrank 12.3 percent to $4.72 billion in December. The decline was due to a hefty fall in shipments of machinery and transport equipment, coconut oil and electronic products.
Weak exports along with soaring consumer prices led to the government missing its revised growth target of 6.5 percent to 6.9 percent last year.
The government, however, is optimistic that growth will gather momentum in coming quarters with inflation expected to cool further, helped by lower oil prices, and that would lift domestic consumption this year.