Philippine Import Growth Quickens on Rising Oil Price

By Karl Lester M. Yap

Sept. 25 (Bloomberg) -- Philippine imports rose at the fastest pace in five months in July as oil prices climbed to unprecedented levels.

Imports grew 16 percent from a year earlier to $5.85 billion, after gaining 12.7 percent in June, the National Statistics Office said in Manila today.

The rising cost of buying oil from overseas prompted the central bank to increase its trade-deficit forecast to $13.2 billion this year from $11 billion, Deputy Governor Diwa Guinigundo said on Sept. 19. A widening trade gap has contributed to the peso's 11 percent decline this year, making imports even more expensive.

``The abrupt rise in commodity prices is fueling the trade deficit,'' said Jonathan Ravelas, an economist at Manila-based Banco de Oro Unibank Inc. ``Going forward, import growth may slow because we have seen oil prices come down.''

Crude futures have fallen by about a quarter after reaching an unprecedented $147.27 a barrel on July 11 in New York. Prices of rice and other commodities rose to records earlier this year.

The Philippines' trade deficit widened to $1.41 billion in July from $793 million a year earlier, today's report showed. The shortfall for the first seven months of the year was $5.35 billion, compared with $1.7 billion a year earlier.

Rate Increases

Surging food and fuel prices have pushed inflation to the fastest in more than 16 years in a nation that buys almost all of its oil overseas and is the world's biggest rice importer. That prompted the central bank to raise its benchmark interest rate for the third straight month in August, to 6 percent.

Crude oil and other fuel imports jumped 71.8 percent in July from a year earlier to $1.76 billion after gaining 75.7 percent the previous month. Oil in New York traded at an average of $133.48 a barrel in July, 80 percent higher than a year earlier.

Imports of electronics parts fell 17.4 percent from a year earlier to $1.75 billion, suggesting exports will weaken in the coming months. Finished consumer electronics make up about two- thirds of total exports.

Exports rose a revised 4.4 percent in July, compared with the preliminary 4.3 percent gain announced on Sept. 10.

To contact the reporter on this story: Karl Lester M. Yap in Manila at Kyap5@bloomberg.net.