Domestic goods trade falls 20% in Q1

By Isa Jane D. Acabal, Researcher

DOMESTIC TRADE in goods declined by 20% year on year in the first quarter, amid slower economic growth and supply-chain disruptions, analysts said.

Preliminary data from the Philippine Statistic Authority’s Commodity Flow Survey showed the value of total domestic trade fell by 19.8% to P820.81 billion in the January-to-March period from P1.02 trillion in the same period in 2025.

By volume, domestic trade dropped by 35.3% to 10.17 million tons in the first quarter from 15.72 million tons a year earlier.

The value of commodities transported by road reached P526.11 billion, accounting for 64.1% of the total. Goods transported by water were valued at P294.12 billion (35.8% share), while those transported by air were valued at P567.9 million (0.1% share).

“The sharp decline in domestic trade in goods in the first quarter appears to have been driven by a combination of weaker economic activity, lower agricultural and fisheries output, and supply-chain disruptions,” Ateneo Center for Economic Research and Development Senior Research Fellow Ser Percival K. Peña-Reyes said in a Viber message.

The Philippine economy grew by 2.8% in the first quarter of 2026, sharply slowing from the 5.4% expansion a year earlier and the 3% growth in the fourth quarter of 2025.

Marco Antonio C. Agonia, an economist at the University of Asia and the Pacific, also attributed the year-on-year decline in the value and volume of domestic trade to the subdued economic environment in the first three months of the year.

“From the downbeat Q1 2026 GDP reading, we can piece together lower spending appetite from both consumers and businesses resulting in lower domestic trade flows. The local economy bore the brunt of the aftermath of the flood control scandal along with the Middle East war, dampening local trade flows,” Mr. Agonia said in an e-mail.

Domestic trade by value is the outflow value of commodities transported from the place of origin to the destination.

Machinery and mechanical appliances posted the highest outflow value at P200.96 billion or 24.5% share to the total value of domestic trade.

This was followed by optical, photographic, cinematographic, measuring, checking, precision, medical or surgical instruments with P118.7 billion (14.5% share) and prepared foodstuffs with P117.36 billion (14.3% share).

“The large outflow for machinery and mechanical appliances reflects beginning-of-the-year capex (capital expenditure) spending that firms initially rode on,” Mr. Agonia said, adding that firms sought to focus expansion efforts this year.

Mr. Peña-Reyes said the high outflow value of machinery and mechanical appliances were due to “strong manufacturing and industrial activity in major regions, infrastructure and construction projects, expansion of logistics and transport sectors, electronics and machinery trade linkages, high unit value of machinery products, and road transport dominance.”

During the first quarter, Calabarzon accounted for 40.4% of the total domestic trade value with P331.62 billion, followed by Central Visayas with P100.5 billion (12.2% share) and Davao Region with P98.41 billion (12% share).

Meanwhile, the National Capital Region recorded the largest inflow value at P357.73 billion (43.6% share), followed by Soccsksargen (P93.3 billion or 11.4%) and Negros Island Region (P85.33 billion or 10.4%).

Calabarzon posted the largest trade balance — the difference between outflow value and inflow value — with a P247.82-billion surplus. This was followed by Central Visayas with a P74.37-billion surplus and Davao Region with a P72.11-billion surplus.

“The Q1 2026 domestic trade pattern suggests a stronger concentration of economic activity in a few highly industrialized and logistics-connected regions, especially Calabarzon,” Mr. Peña-Reyes said.

Mr. Peña-Reyes said domestic trade is seeing a more integrated but uneven structure where “industrial corridors in Luzon are becoming even more dominant, while Cebu and Davao are reinforcing their roles as secondary national trade hubs.”

For Mr. Agonia, the latest domestic trade print “highlights the role of new economic centers apart from Metro Manila, capable of producing value-added goods.”

Moving forward, Mr. Peña-Reyes said domestic trade may grow at a slower pace due to “weaker household demand, high transport costs, and softer industrial activity.”

Mr. Agonia expects domestic trade to weaken in the first half of the year given the impact of the Middle East conflict on the Philippine economy.

“This may turn more sanguine in the second half, as the widely expected return of public infrastructure spending stimulates the economy,” he added.