THE lockdowns imposed by the country’s trade partners caused more damage to the country’s external trade performance than the local lockdowns imposed by the national government, according to a study by World Bank economists.
In a working paper, World Bank economists Guillermo Carlos Arenas and Angella Faith Montfaucon as well as University of Nairobi’s Socrates Majune said external lockdowns caused Philippine exports to suffer 7 percent monthly average declines in 2020, while imports plunged 56 percent on average monthly during the period.
The data also showed that the country’s imports from countries that imposed lockdowns shrank by a monthly average of 56 percent in terms of value and 78 percent in terms of volume. The economists said this indicated a drop in domestic demand and supply-side disruptions on imported inputs.
“Our results reveal that domestic lockdown policies did not affect international trade in the Philippines; instead, exports and imports plunged due to external lockdowns,” the economists said in the paper. “Overall, the lockdown had a larger effect on imports than exports.”
The combined drop in Philippine exports of goods and services was larger than in the Asian financial crisis in 1998, at a contraction of 14.7 percent; and the global financial crisis in 2008-2009, with a decline of 11.8 percent.
“While both exports and imports dropped upon imposition of the lockdown by trading partners of the Philippines, these affected import values more [over 50 percent average monthly drop] than exports [less than 10 percent drop],” the authors said in a blog post.
The authors also said a number of products were the key drivers of the lackluster performance of the country in terms of exports and imports.
They noted, however, that the country’s top trade partners such as China, Japan and the United States were among the major reasons for the decline in imports.
In terms of commodity groups, intermediate goods, particularly Consumer Electronics, and Machinery transport equipment, were the key drivers of the drop in imports.
The authors also stressed that Philippine exports to the country’s top 10 partners and shipments of intermediate goods were more resilient to foreign lockdowns.
“In terms of measures, the impact on imports [was] driven by workplace closures, stay-at-home requirements, restrictions on internal movement, and international travel controls by trading partners. For exports, restrictions on internal movements and international travel controls in partner countries were the key driver,” the authors said in a blog post.
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