The Philippine Statistics Authority (PSA) has released the country's international merchandise trade statistics (IMTS), and the January-August figures point to a widening external imbalance. Total exports rose from $55.8 billion in 2025 to $64 billion in 2026, while total imports over the same period climbed from $88.7 billion in 2025 to $105.6 billion in 2026 — meaning the value of goods the country buys from abroad is growing faster than the value of what it sells overseas.

As a result, the merchandise trade deficit has widened from -$32.9 billion in 2025 to -$41.6 billion. In the view of columnist Bienvenido S. Oplas, Jr., a deficit of this magnitude should be covered by a non-merchandise trade surplus of similar size — trade in services and other non-goods inflows — in order to ease pressure on the Philippine peso, but that is not happening. The peso has accordingly depreciated from about P57 per US dollar in August 2025 to about P62/$ in August 2026, and a weaker peso in turn makes imported goods and dollar-denominated payments more expensive in local currency.

China remains the largest source of Philippine imports by a wide margin. Imports from China over the January-August period increased from $19 billion in 2023 to $30 billion in 2026, lifting their share of total imports from 22.8% to 28.8%.

Imports from South Korea made a dramatic jump this year, from $6.7 billion in 2025 to $13.9 billion in 2026, equivalent to 13.2% of total imports. By contrast, the share of the United States keeps declining, from 6.7% in 2023 to 5.6% in 2026. These country-level shares are among the most revealing details in monthly trade data, since they trace where the trucks, appliances, and other goods entering the economy are actually coming from.

Japan, the country's main source of imports decades ago, accounted for only 7.6% of the total in 2026. Oplas argues that Japan is slowly losing its competitiveness to South Korea and has definitively lost it to China: while many cars in the Philippines still carry Toyota and other Japanese brands, the bulk of trucks, buses, appliances, and gadgets now come from China.

The trade figures coincide with continued diplomatic engagement with Tokyo. Last May, President Ferdinand Marcos, Jr. traveled to Japan on an official state visit to help expand trade, investment, energy, and diplomatic relations. On Sept. 17, Japan's Senate Vice-President, Fukuyuma Tetsuro, visited the Philippines to advance parliamentary exchanges and reaffirm the Philippines-Japan Comprehensive Strategic Partnership, with Executive Secretary Ralph Recto welcoming him to Malacañang. How Japan's position in the import mix develops alongside that diplomatic effort is one thread to follow in the PSA's upcoming country-level releases.

On the fiscal side, the Bureau of the Treasury (BTr) recently released the National Government (NG) cash operations report (COR) for August. Comparing the January-August CORs of the last two years, Oplas finds that the budget deficit keeps deteriorating, from P697 billion in 2024 to P1.05 trillion in 2026. Allotments to local government units (LGUs) rose sharply, from P673 billion in 2024 to P945 billion in 2026 — an increase that, in his assessment, will further expand the LGUs' fiscal surpluses while the National Government retains a large fiscal deficit.

Interest payments alone already total P686.5 billion — an average of P98.1 billion a month, or P3.3 billion a day. These are the cost of servicing debt already incurred, and they come due regardless of how much is left for other programs. Net financing or borrowing, defined as new loans minus amortization of old loans, has reached P1.5 trillion this year, up from P892 billion in 2024. The BTr's monthly CORs, together with the PSA's trade releases, are the documents to watch for the next readings on whether the external and fiscal gaps continue to widen or level off through year-end.

Oplas contends that many National Government agencies are wasteful, continuing to expand spending despite similar services already provided by LGUs that run fiscal surpluses. He likewise criticizes the Military and Uniformed Personnel (MUP) pension system, under which highly paid active military, police, and coast guard personnel contribute nothing to their own pensions. By contrast, government doctors and nurses, lawyers and prosecutors, teachers and professors, engineers and agriculturists all fund their future pensions through contributions to the Government Service Insurance System. In his words, the MUP pension system "remains a wasteful and corrupt scheme that further bleeds the average Filipino taxpayer."

Bienvenido S. Oplas, Jr. is president of Bienvenido S. Oplas, Jr. Research Consultancy Services and Minimal Government Thinkers, and an international fellow of the Tholos Foundation. He can be reached at minimalgovernment@gmail.com.

This commentary was originally published by BusinessWorld.