The trade deficit narrowed significantly in April, reflecting a rare convergence of rising exports and declining imports. The foreign trade gap declined to USD3.5 billion, down from a revised USD4.5 billion in March, according to data released Friday by the Philippine Statistics Authority (PSA).
The improvement was driven by a 7 percent year-on-year increase in exports, led by robust demand from the United States, which remained the country’s top export destination. At the same time, imports contracted by 7.2 percent, underscoring weaker domestic demand and possibly reflecting deferred capital goods purchases amid global economic uncertainty.
April’s trade deficit of USD3.494 billion marks a notable shift from previous months. It remains elevated relative to historical norms—the Philippines has averaged a monthly trade deficit of around USD685 million since 1957—but is well below the record low of USD5.99 billion posted in August 2022.
The narrowing gap could offer temporary support to the Philippine peso and ease inflationary pressures by reducing the demand for foreign currency. However, analysts caution that the underlying drivers—a drop in imports and external demand volatility—could be symptomatic of broader economic fragility.
“While the uptick in exports is encouraging, the sharp fall in imports suggests tepid investment activity, which may weigh on medium-term growth prospects,” said a senior economist at ING Bank.
Looking forward, policymakers remain wary. With ongoing disruptions in global supply chains, geopolitical tensions, and monetary tightening in key economies, the outlook for Philippine trade remains clouded.
“Trade flows are likely to stay volatile in the near term,” the Bangko Sentral ng Pilipinas (BSP) noted in a recent statement, citing external headwinds that could temper both export momentum and import recovery.
The April data offer a mixed signal: a short-term improvement in external balances, but lingering risks that could hamper sustained trade-led growth through the rest of the year.
