Trade deficit likely to widen further

The country's trade deficit is likely to remain on the rise amid continued government infrastructure spending as well as higher private sector demand due to easing monetary policy, according to ANZ Research.

-  CATHERINE TALAVERA

In its Philippine Insight report, ANZ Research said the country's trade deficit has been increasing since April 2024, hitting $5.1 billion in September, the highest in 20 months.

"The recent deterioration is due to diverging paths of exports and domestic demand. Essentially, exports are stagnating at a time when policymakers are stepping up infrastructure-related spending," ANZ Research said.

"This divergence is likely to stay as the government keeps up with its infrastructure spending program and monetary policy easing lifts up private sector demand," it added.

ANZ Research said the weakness in exports lies in limited productivity gains in the tradables sector.

It said the Philippines' share in world exports has been declining since 2017 and that there have been no gains in exports in absolute terms, with monthly exports remaining static since 2021 at a little over $6 billion.