PHILIPPINES’ BALANCE OF TRADE AND BALANCE OF PAYMENT

What is Balance of Trade?

The balance of trade is the difference between the value of a country's

imports and exports for a given period. The balance of trade is the largest component of

a country's balance of payments. Economists use the BOT to measure the relative

strength of a country's economy. The balance of trade is also referred to as the trade

balance or the international trade balance.

- It does not take into account trade of invisible items.

- Balance of Trade is a sub-set of Balance of Payment

What is Balance of Payments?

The balance of payments (BOP), also known as balance of international payments,

summarizes all transactions that a country's individuals, companies and government

bodies complete with individuals, companies and government bodies outside the

country. These transactions consist of imports and exports of goods, services and

capital, as well as transfer payments such as foreign aid and remittances.

- Exchange of goods for goods

- Goods for services

- Services for services

 - Goods and services for money etc

PHILIPPINES’ BALANCE OF TRADE AND BALANCE OF PAYMENT OVER THE

LAST 20 YEARS

In 1998, the Philippines recorded a trade surplus at about 2% of GNP in the

current account due to high electronics exports and low imports due to the devaluation

of the peso. This was the first surplus in 12 years.

Merchandise exports, in double digits through most of the 1990s, slowed to a

single-digit growth pace in 2000, reflecting fewer export receipts from electronics and

telecommunications parts and equipment. This decline was attributed by the electronics

industry to weaker prices for maturing products and technologies, and to the decline in

electronic industry investments from the 1994–97 boom years (when investment

averaged $1.5 billion a year)

Many difficulties remained, however. The prices of commodity exports, such as sugar,

copper, and coconut products, were still weak, while demand for nontraditional

manufactured products, such as clothing and electronic components, failed to rise. The

structural reforms produced an initial recovery between 1986 and 1989, but this was

arrested by the series of natural disasters in 1990–1991. In 1986, Aquino had also

embarked on a Comprehensive Agrarian Reform Programme, but its goals remain

unfulfilled.
 In the 1990s, the government concluded three additional financial arrangements

with the IMF—a stand-by agreement signed 20 February 1991 for about $240 million

(all drawn); an arrangement under the Extended Fund Facility (EFF) signed 24

June 1994 for about $554 million (all drawn), and a stand-by agreement signed 1

April1998 for about $715 million (76.7% drawn down as of 31 December 2002). At the

end of 2002, the Philippines owed over 140% of its quota to the Fund. Scheduled debt

repayments to the IMF for 2003 are about $330 million, and outstanding loans and

purchases are not due to be retired until at least 2007. The country also had five debt

reschedulings in the period 1984 to 1991 with the Paris Club—for official debt owed to

aid donor countries—on which some payments are still owing. In January 2003, the

Trade and Development Department announced at least a partial retreat from its 15

years of trade and investment liberalization, stating that it plans to bring tariff rates to

the maximum allowed by the WTO for industrial imports, particularly petroleum imports,

and for products produced in the Philippines. This would entail raising some duties that

had previously been lowered. Exempted

would be imports needed by its local

manufacturers. Industrialization of the

economy, and, therefore a major improvement

in the country's terms of trade, remains

elusive.

The International Monetary Fund (IMF)

reports that in 2001 the Philippines had

exports of goods totaling $31.2 billion and

imports totaling $28.5 billion. The services credit totaled $3.15 billion and debit $5.09

billion. The following table summarizes the Philippines's balance of payments as

reported by the IMF for 2001 in millions of US dollars.

The Philippine's trade deficit widened sharply to USD 4.21 billion in October of

2018 from USD 2.59 billion in the same month a year earlier. It was the largest trade

gap on record, as import rose much more than exports. Considering the first ten months

2018, the trade deficit increased sharply to USD 33.92 billion from USD 20.13 billion in

the same period a year earlier. Balance of Trade in Philippines averaged -357055.43

USD Thousand from 1957 until 2018, reaching an all time high of 1144700 USD

Thousand in September of 1999 and a record low of -4212000 USD Thousand in

October of 2018.

The country’s overall balance of

payments position in January-September 2018 posted a deficit of US$5.14 billion,

275.71% higher than the US$1.37 billion deficit recorded in January-September 2017
 In 2017, the balance of

payments position yielded a deficit of

US$0.86 billion. The country’s current

account registered a deficit of

US$2.52 billion in 2017 from a

US1.20 billion deficit in 2016.

Meanwhile, the financial account

recorded a negative net outflows of

US$2.21 billion from a surplus of

US$175 million in 2016

What are our principal exports? Which countries are our

major export market?

Economy of the Philippines

Export goods Semiconductors and

electronic products, Transport

equipment, Garments, Copper

products, Petroleum products,

Coconut oil, Fruits

Main export partners Japan 16.2% United States 14.6%

Hong Kong 13.7% China 11.1%

 Singapore 6.1% Thailand 4.2%

Germany 4.1%

Electronic products led the country’s top export merchandise in January-

September 2018, with receipts valued at US$28.46 billion, an increase of 5.7% from its

level in the same period last year at US$26.91 billion. Other top export products in

January-September 2018 were: other manufactured goods, US$2.98 billion; machinery

and transport equipment, US$2.63 billion; metal components, US$1.28 billion; and

ignition wiring set and other wiring sets used in vehicles, aircrafts and ships, US$1.20

billion.

What are our principal import? Which countries are our

major import market?

Economy of the Philippines
Import goods Electronic products, Mineral fuels

and Transport equipment

Main import partners China 13%, United States 11%,

Japan 8% and Taiwan 8%

The country’s total import services in S1 2018 amounted to US$13.01 billion, an

increase of 0.5% from US$12.94 billion in S1 2017. Travel services topped the

country’s import services, with receipts valued at US$5.92 billion, an increase of 0.3%

from its level last year at US$5.90 billion. Other top import services in were: transport

services, US$2.42 billion; other business services, US$2.21 billion; insurance and
pension services, US$757.1 million; and, telecommunications, computer, and

information services, US$509.4 million.

The Philippines has been named as one of the Tiger Cub Economies together

with Indonesia, and Thailand. It is currently one of Asia's fastest growing economies.

However, major problems remain, mainly having to do with alleviating the wide income

and growth disparities between the country's different regions and socioeconomic

classes, reducing corruption, and investing in the infrastructure necessary to ensure

future growth.

The Philippine economy is projected to be the 5th largest in Asia and 16th

biggest in the world by 2050. According to the PricewaterhouseCoopers, it estimates

that it will be the 12th to 14th richest economy in the world by 2060. While this opposes

other reports from HSBC Holdings PLC, that by the year 2050, the Philippines will have

been stated to surpass the economy of Indonesiadue to its yearly higher GDP growth

rate of 6.5% (Second, after China). However, the economic statistics may still vary

depending on the performance of the government every year

https://www.nationsencyclopedia.com/Asia-and-Oceania/Philippines-BALANCE-OF-
PAYMENTS.html#ixzz5bM4eGz00

https://psa.gov.ph/content/highlights-foreign-trade-statistics-philippines-first-semester-
2018

https://en.wikipedia.org/wiki/Economy_of_the_Philippines