TREND OF THE PHILIPPINES TRADE DATA WITH RESPECT TO ANNUAL TRADE DEFICIT

MEANING OF TRADE DEFICIT AND ITS IMPLICATIONS

Trade Deficit is a term used to denote the negative gap between the Imports and Exports made by a country in one fiscal year. In simple terms, when the value of total imports becomes larger than the value of total exports, then the situation of Trade Deficit arises where the outflow of money becomes more than the inflow.

There are two main and biggest reasons why a country faces a trade deficit. One, when a particular nation is not able to produce every good domestically, then in order to fulfill the demands of its citizens, the nation tends to import a variety of goods from different countries and pay import taxes. Secondly, when most of the companies of a nation are in the manufacturing business and are set up abroad, importing the finished products from them incurs a huge cost that escalates the trade deficit even more.



IMPACT OF TRADE DEFICIT ON COUNTRY AND ITS CITIZENS

There are various impacts connected with trade deficits on a country. They are as follows:

·        At the beginning stage, the people of the nation enjoy high living standards as they get access to every product.

·        If the situation of trade deficit gets longer, then it affects the currency of that nation and weakens it.

·        Outsourcing of jobs abroad takes place.

·        As the trade deficit grows, the demand for domestic products gets reduced and it impacts the local manufacturers and sellers.

 

 

 

 

 

HOW ARE THE RELATIONS BETWEEN THE PHILIPPINES AND TRADE DEFICITS?

The Philippines is an Asian country that is into frequent trade practices. The Philippines has a good percentage contribution to world trade. In statistical terms, the data revealed by the Philippines Import Data for the last 5 years are listed below:

YEAR

IMPORT VALUE

2017

USD 98.48 million

2018

USD 115 million

2019

USD 112 million

2020

USD 90.75 million

2021

USD 124 million

 

On the other hand, the values shown by Philippines Export Data are as follows:

YEAR

EXPORT VALUE

2017

USD 63.23 million

2018

USD 67.48 million

2019

USD 70.33 million

2020

USD 63.87 million

2021

USD 74.61 million

 

On the basis of the statistics mentioned above, we can say that the country is in a trade deficit by a certain amount as the Philippines Import Data is always greater than the Philippines Export Data in these 5 years.

Although the trade deficit keeps on fluctuating every year. For instance, the trade deficit for the year 2019 was 11.8% more than it was in 2018 and likewise, the trade deficit rose in the year 2021 by 68% as compared to 2020.

As per the latest statistics released by the Philippines Trade Data for the year 2022, the trade deficit got narrower in the month of October to some extent where the exports rose more than imports. The goods due to which the Philippines export data rose were electric products, aircraft, and motor spare parts. On the other hand, the major contributors to the Philippines Import Data were metal scrap, transport items, live animals, and fuels.

CONCLUSION

From the statistics, it is evident that the relationship between the Philippines and the trade Deficit is going since a very long time. Every year, there is more or less the same scenario for the country. As the trend of trade deficit is going on for a long time, the initial benefits would have been exhausted, and the citizens would be facing disadvantages now like domestic unemployment and the low value of the currency.

The Philippines should focus more on producing goods domestically rather than being solely dependent on imports. In this way, the country could narrow the gap further.


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