The Philippines would be hard-pressed to meet its export and import targets this year due to the lackluster trade performance of the country in the first quarter, economists said on Wednesday.
Economists interviewed by the BusinessMirror made the pronouncement after the Philippine Statistics Authority (PSA) reported on Wednesday that the country’s export receipts declined by 6 percent, while the import bill grew by only 6.8 percent in the January-to-March period.
For 2018, the government is targeting to hike export revenues and the import bill by 9 percent and 10 percent, respectively.
“It is seasonal for exports, but I was expecting a higher import growth because of infrastructure spending and related activities,” University of Asia and the Pacific School of Economics Dean Cid Terosa told the BusinessMirror.
Terosa said receipts from merchandise exports must grow by 14 percent in the next three quarters to meet the government’s targets. For the import bill, the expansion must average at least 11 percent.
Ateneo Center for Economic Research and Development (Acerd) Director Alvin P. Ang and Unionbank Chief Economist Ruben O. Asuncion both agree that only a double-digit growth in exports and imports can allow the Philippines to hit its trade targets this year.
While demand is usually weak during the first quarter, Ang said the country’s export performance in the first quarter “leaves more questions than answers.” He said the figures are “puzzling” considering that the country’s manufacturing output grew by more than 20 percent during the period.
Despite the decline in export receipts in the first quarter, Asuncion expressed confidence that the government’s infrastructure push would allow the Philippines to end the year with “positive” trade figures. He also said global demand for various commodities produced in the Philippines will recover in the next few quarters.
Strategies
Socioeconomic Planning Secretary Ernesto M. Pernia said concerned government agencies must improve its marketing efforts to sell more products abroad.
“As evident from the slowdown in trade figures of Asia, and even negative performance of the Philippines, China and India in the latest exports figures, the Philippine government should double its efforts in marketing the country’s export products to international consumers,” Pernia said.
He urged the Department of Trade and Industry to continuously encourage exporters to innovate and improve export quality by providing more access to testing, certification and accreditation facilities that will facilitate domestic compliance with international quality standards.
Pernia noted that the government is working on increasing the share of halal goods to 11 percent of total exports through the recent establishment of the National Halal Certification Scheme.
He also highlighted the need to intensify the efforts of the country’s trade missions abroad, including business-matching initiatives in order to create new markets for Philippine-made goods.
The National Economic and Development Authority said the country’s total merchandise trade declined by 3.4 percent in the month of March alone, as exports contracted and imports barely grew at just 0.1 percent from last year.
The value of exports fell by 8.2 percent, from 26.9 percent a year ago, on account of lower revenues from sales of manufactured goods, agro-based products, minerals and petroleum products.
GDP growth
Budget Secretary Benjamin E. Diokno said in a news briefing on Wednesday that GDP likely grew 7 percent in the first quarter. Diokno issued the statement ahead of the release of the GDP data on Thursday.
In a separate interview with the BusinessMirror, Diokno said the manufacturing and services sectors likely boosted GDP growth during the period.
“Industry, manufacturing is very robust, and services, including our banks, that’s what we are looking at. If you look at the report of major companies, their growth rates are high so, on that basis, you can anticipate [that], and you can really see that manufacturing plus construction, to me, are the major drivers,” he said.
Earlier, the Bangko Sentral ng Pilipinas said GDP expansion would likely fall within the 7-percent to 8-percent target of the government. The BSP attributed this to higher government spending on infrastructure.
According to the latest World Economic Outlook released by the International Monetary Fund, the Philippines is expected to be the fastest-growing economy in Southeast Asia and second fastest in the world over the next two years.
Image credits: Nonie Reyes