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Philippines trade balance deficit narrowed as imports continued to decline

Tue, Oct 27 2009, 02:25 GMT
by ecPulse.com analysis team

ecPulse.com

A report today showed that Philippines trade balance deficit narrowed in August as imports continued to decline for the second straight month reflecting weak domestic demand that fell sharply along with increasing unemployment.

Philippines trade balance deficit narrowed in August recording $144 million compared with a previous deficit of $715 million. On the other hand, imports recorded $3617.3 million in August from $4025.9 million back in July, while it declined 28.3% in August from a year earlier coming after a drop by 31.6%.

However, today's report showed that imports dropped for the second straight month as it slipped 10.2% in August from the previous month when it fell 2.0%.

On the other hand, the nation's shipments rose recently along with recovering world demand as we witnessed exports recording $3472.1 million in August better than the previous $3311.7 million, while it declined 21.0% in August from a year earlier less than the previous decline by 25.4%.

Philippines economic growth accelerated in the second quarter as the gross domestic product grew 1.5% in the quarter ended July from a year earlier compared with a revised 0.6% in the first quarter. The economy expanded 2.4% on quarterly basis coming after a revised contraction by 2.3%.

Philippines government allocated 330 billion piso that was planed to be spent on infrastructure projects, providing job opportunities and supporting domestic demand which was negatively affected by increasing unemployment that forced households to cut spending and delay purchases.

The budget deficit widened threatening economic recovery, having in mind that budget deficit in July came in at $34.6 billion, while tax revenue declined as corporate earnings fell since the beginning of the financial crisis the worst since the great depression.

Finally, Philippines government is anticipating more sings of recovery to appear before the end of this year along with advancing economic conditions around the world that will help the nation's economy to find its way to full recovery. More sings of improvements are likely to be seen as a result of the government's stimulus spending and low interest rate that was kept at 4.00% after the central bank cut the nation's benchmark 2.00% between December last year and July this year.

Published on  Tue, Oct 27 2009, 02:27 GMT