Philippines imports likely to surge on robust demand for capital goods

Philippines overall import growth is likely to surge, highly driven by boost in demand for capital goods, which have averaged more than 40 pct growth in the last two quarters. Therefore, a demand-led import growth should hardly be a surprise for the economy.

Import growth is likely to come in at 5.9 pct in Q1 2016. However, this robust growth in demand for capital goods is unlikely to be sustainable, mainly post the election mood sizzles out. Import demand is expected to fade away once domestic demand normalizes, following the aftermath of the elections.

"Which is why the authorities are not too concerned about the trade balance going forward," DBS mentioned in a research report.

More importantly, as far as the overall current account balance is concerned, foreign remittances remain above USD 2 billion per month, more than enough to cover the average USD 1billion per month in trade deficit over the past year, DBS reported.