The Philippines merchandise-exports sector entered its 12th consecutive monthly decline in April after suffering a 15.1% plunge in March – with earnings US$0.8 billion down on March 2015. But while global factors – lacklustre growth in the large trading-partner countries in the West; the protracted economic slowdown in China – can be held largely responsible for the loss of earnings, Philippine competitiveness among its Asian peers is also being called into question. The depression that hit Philippine exports in March clearly missed Vietnam, exports up 13.3%, China, up 11.5% and Thailand, a rise of 1.3%.
Exports for the first quarter of the year – amounting to US$13.1 billion, an 8.4% drop from the US$14.3 billion registered in 1Q15 – have presented a serious wake-up call for the industry. Based on this performance, the Philippines would need to grow its exports by 8.3% by the end of the year, if it is to get close to the 2016 annual growth figure of 5.4%, projected by the National Economic and Development Authority (NEDA).
Acting Socioeconomic Planning Secretary and NEDA Director General, Emmanuel F. Esguerra, believes that his country’s merchandise exporters need to be more new-markets driven than they have been. Other less-traditional export destinations should be pursued with a broader and more-innovative range of products to expand their market base. This way, he believes, the sector can meet the global challenge head on.
Esguerra feels that the government also needs to step up. “To be able to reach out to other potential export markets and sell our products, it is crucial to ease government regulation and strengthen market-intelligence gathering in partnership with the private sector”, he said. Industry and national competitiveness, he added, need to be promoted by introducing policies that will assist domestic players to enter the smaller, hitherto neglected, higher-value areas of the global value chain. Opportunities in trade agreements and with economic groupings “particularly within the Asean region,” should also be fully exploited.
Economics analysis provider, Focus Economics estimates that the Philippines will post a trade deficit of US$9.2 billion this year, rising to US$10.1 billion in 2017.