1995-Based Foreign Trade Indices of the Philippines
(1996 to 1997)
 

        For more than a decade the National Statistics Office (NSO) has been responsible for generating the Foreign Trade Indices (Import/Export) of the Philippines with 1972, 1975 and 1985 as base periods. In response to the clamor for a more recent base year to make the indices relevant and to be more reflective of the current situation of the economy, a technical working group (TWG) was created by the National Statistical Coordination Board (NSCB) with representatives from National Statistics Office (NSO) and Bangko Sentral ng Pilipinas as members and the Statistical Research Training Center as chair to revise the methodology and update the base year of the indices. The resulting output of the TWG was approved last October 1997 under NSCB Resolution No. 14 Series of 1997.
 

A.  The New Series

        The revised methodology is the basis for the recently generated 1991-Based Foreign Trade Indices. This report covers the new series of import/export indices computed by NSO for the years 1996 to 1997 with 1995 as base year.

        The series consist of indices of value, price and quantum, as follows:

• Value index - measure of performance at current prices
• Quantum index - base weighted and is the measure of real growth.
• Price index - reflects the development of prices over time.

        Rebasing of the series to 1995 would not only facilitate the generation of base data but would also make the movement in the series less artificial as the basket would be more reflective of commodities moving in the market.

        Changes in the import content and composition of exported products are the major reasons for the need for this new series of indices. The revision also integrated the new changes in the coding scheme from the 1989 Philippine Standard Commodity Classification (PSCC) to 1993 PSCC Revised which was adopted in generating trade data starting 1995.

        The main objective of indices is to break down changes in the values of exports or imports into price changes and volume changes and thus helps analyze whether a change in value of exports or imports of a commodity or group of commodities can be explained by changes in prices, quantities or both.
 

B.  Uses of Trade Indices

        The foreign trade indices measures the changes in the prices of commodities exported from, or imported into the Philippines.

        The following are the uses of these indices:

• measurement of import and export price trends for detailed and aggregate commodity groups

 

• analysis of effects of price changes on Philippine economy and balance of payments

 

• analysis of price behavior in international markets

 

• basis for calculating changes in volume of Philippine exports and imports

C.  Adoption of the 1993 Philippine Standard Commodity Classification (PSCC)

        In 1995, the Revised Philippine Standard Commodity Classification (1993 PSCC) was implemented. It is a classification system that is consistent with the Standard International Trade Classification, Rev. 3 (SITC, Rev. 3). Though the basic classification concepts remained the same as that for the 1989 PSCC, significant changes had been incorporated in the revision to include new products, allow for separation of commodities that had recently been enjoying high demand in the world market from other commodities classified similarly, and regroup commodities consistent with the current trends in the world market.
 

D.  The Revised Methodology

        The following schematic diagram summarizes the operationalization of the revised methodology.

a.  Base Data

        Annual

        The base data used are the quantity and value on the import/export of specific commodities (at the 7-digit PSCC) for the whole year of 1995. This is used as the base data for computing annual indices.

        Quarterly

        Monthly

b.  Summarization of Current Data

        Screening of wild values for each commodity

     All transactions of a commodity whose unit prices are outside the acceptable price range are
     considered outliers.

     Summarization of current data at the 7-digit level

c.  7-Digit Level Indices

        Three index numbers are generated at the 7-digit level and these are:

• Value Index, VI;
• Price Index, PP; and
• Quantity Index, QL.

        Value Index, VI

        The Value Index, VI, of a commodity is computed as follows:

        Price Index, PP

        The Price Index, PP, of a commodity is computed as follows:

        Quantity Index, QL

        The Quantity Index, QL of a commodity is derived as

d.  3-Digit Level Indices

        Value Index, VI_th at the 3-Digit PSCC

        The value index, VI_th for a 3-digit commodity group is computed as follows:

        Price Index, PP_thi at the 3-Digit Commodity Group

        Before the price index for the 3-digit commodity group is computed, another screening
        technique is applied. The following procedure describes the screening technique used:

                                                __
        Œ The mean price index, PP_th is determined for the commodity group.

        � The variance of the price indices is also computed.

        Ž The acceptable range of price index for the commodity group is also constructed.

        � All commodities within this range are included in the computation of the price index of the
            3-digit commodity group. The price index, PP_th, for the commodity group is computed
            as follows:

        Quantity Index, QL_th at the 3-Digit Commodity Group

        The Quantity Index, QL_th at the 3-digit commodity group is derived as follows:

e.  Overall, 1- and 2-Digit Level Indices

        Indices at the 2-Digit PSCC

        The Value Index, VI_tgh, at the 2-digit level is computed as

        The Price Index, PP_tgh, at the 2-digit level is computed as follows:

        The Quantity Index, QL_tgh at the 2-digit level is derived as

        Indices at the 1-Digit PSCC

        The Value Index, VI_tfg, at the 1-digit level is computed as

        The Price Index, PP_tfg, at the 1-digit level is computed as follows:

        The Quantity Index, QL_tfg at the 1-digit level is derived as

        Overall Indices

        The Overall Value Index, VI_t, is computed as

        The Overall Price Index, PP_t, is computed as follows:

        The Overall Quantity Index, QL_t, is derived as

f. Treatment of Missing Data

        It is not unusual for the value of transactions in specific commodities to be zero for certain period; i.e., they have not been exported/imported during the reference period. Adjustments in the computation of indexes are made, depending on whether the absence of a transaction leads to no base data or no current data.

• No base data

        When no transactions on a 7-digit commodity was recorded in 1991, there would be no base data for the commodity. Since the indices are computed by including all the records for a given period, the following measures are taken:

• P_ohi = unit price of commodity i when it first appears (for purposes of computing succeeding indices)
• PP_thi = 100.00 for the first period PSCC i appears
• Only PP_thi will be computed for succeeding periods.
• VI_thi and QL_thi will not be computed

• No current data

        For some periods after the base year, it would be possible that no transaction on a specific commodity would be made. Hence, there would be no current unit price, quantity and value. In cases such as this, the current unit price and price index are assumed to be the latest unit price recorded. Value and quantum indices are assumed to be zero until the commodity reappears in list of transactions, i.e.,

• P_thi = latest available unit price
• PP_thi = latest available price index
• VI_thi = 0.00
• QL_thi = 0.00

E.  Available Indices

        The most detailed commodity specification in the foreign trade statistics contain approximately 8,314 sub-items and they are defined as aggregates of the commodity classification by which the indices are based on.

        The indices calculations are based on the customs declarations which are the foundation of the foreign trade statistics. For the purpose of calculating indices, the information about value (FOB US Dollars) and quantity for exports and imports are used.

        The foreign trade indices presented are only summaries of statistics at 1-digit PSCC level on a quarterly and annual basis.

        However, electronic tabulations on a detailed commodity level (2, 3 digit) on a quarterly basis are available at the Trade Statistics Division, Industry and Trade Statistics Department upon request.