Philippine imports in September fell 25% from a year earlier due to the lower cost of cereals and oil products, but was up slightly from August on higher purchases of electronics products and capital goods.

The latest trade data is further evidence that the economy is on the road to recovery, albeit at a slower-than-expected pace, economists said.

The National Statistics Office said yesterday that imports in September totaled $3.67 billion, down from $4.89 billion in the same month last year but gained 1.5% from the $3.62 billion registered in August, when imports fell a sharper 28% on year. In the nine months to September, total imports fell 30% to $31.67 billion from $45.38 billion in the year-earlier period.

"The decline in September was lower than what we expected. This shows the recovery is still patchy," said Song Seng Wun, regional economist at CIMB-GK Research. "Demand is on the mend, but gradually."

He said the lower base from last year will likely exaggerate the rebound in import and export numbers in the last quarter of 2009 but the real test on the sustainability of the recovery will be early next year.

Prakriti Sofat, regional economist at Barclays Capital, said in a note to clients that imports, particularly that of consumer goods, should gradually turnaround in the coming months "given the robustness of remittance and consumers also becoming more upbeat."

Sofat said with exports improving faster than imports, the Philippines' current account surplus could even exceed Barclay's forecast of $4.5 billion for 2009, underpinning a stronger peso along with the steady growth in remittance.

Given the exports data reported earlier, statistics office said the country saw the trade deficit narrow to $34 million in September from $445 million in the year-earlier month, and to $4.04 billion in the January-September period from $6.48 billion in the same period last year when oil and rice prices were at record highs.

Electronics imports totaled $1.33 billion in September, down 22% from a year earlier but up 2.2% from the $1.30 billion in August. A large portion of electronics imports are used as raw materials for the country's main export. (Dow Jones)