THE country’s exporters should brace for a difficult 2019 as the lackluster performance of global trade is expected to continue this year, the National Economic and Development Authority (Neda) said.
Socioeconomic Planning Secretary Ernesto M. Pernia acknowledged the need to improve the country’s mid-term export strategies and sustain merchandise trade growth this year.
The Philippine Statistics Authority (PSA) reported on Thursday that the country’s total merchandise trade grew by 4.1 percent, reaching $15 billion in November 2018. This is the slowest pace since the 2.7 percent recorded in March 2018.
“Moderation in global growth appears inevitable in 2019. Given a less encouraging global economic outlook, the country needs to ramp up the implementation of strategies outlined in the Philippine Export Development Plan 2018-2022,” Pernia said in a statement.
He added that supporting micro, small and medium enterprises (MSMEs) is necessary to increase their participation in global value chains.
“Simplifying loan processes, provision of financial literacy trainings, and facilitation of linkages between MSMEs and large corporations are some ways to spur the internationalization of MSMEs,” Pernia said.
He said the Foreign Investment Act must be reformed to allow foreign firms to transfer manufacturing facilities to the Philippines to serve both the domestic and regional (Asean) markets.
Pernia said a low-hanging fruit is the full implementation of the Ease of Doing Business Act, which calls for the creation of the Expanded Anti-Red Tape Authority and the full operationalization of the National Single Window.
These measures, he said, will benefit existing firms, encouraging expansion, as well as attract new firms to do business in the country.
Wider deficit
“A widening current-account balance due to rising capital goods imports and anemic exports growth is a cause for concern. The widening gap emphasizes the need to reform legislation to allow foreign investments in firms catering to the domestic market, in addition to expanding their exporting activities,” Pernia said.
Trade deficit last November rose to $3.9 billion, from last year’s $3.28 billion. The November deficit, however, is lower than the $4.21 billion recorded in October.
In November, total export sales declined by 0.3 percent to $5.57 billion, from $5.58 billion a year ago. Pernia said the decline in exports was mainly driven by the contraction in mineral and electronics exports.
Payments for imports amounted to $9.47 billion, 6.8 percent higher than last year’s $8.86 billion. PSA data showed export
earnings contracted 0.9 percent in the
January-to-November period while imports grew an average of 15.8 percent during the period.
Figures from the PSA indicated that export receipts recorded by the country’s top 10 market destinations for November reached $4.58 billion, or 82.2 percent of total revenues.
Top 3 markets
The top 3 export markets for the Philippines last November were the United States, Japan, and Hong Kong which accounted for 16 percent, 14.7 percent, and 13.1 percent of the total, respectively.
Exports to the US amounted to $893.20 million. This represented a 12.6-percent increase, from $793.46 million posted in November 2017.
Shipments to Japan were valued at $819.07 million. But this represented a decrease of 1.3 percent from last year’s $829.92 million.
Hong Kong’s purchases of local products reached $729.01 million, 15.2 percent lower than the $859.78 million recorded a year ago.
In terms of imports, the country’s bill from the top 10 import sources amounted to $7.06 billion, or 74.5 percent of the total during the period.
The top 3 sources of imports for November were China, the Republic of Korea, and Japan which accounted for 18.7 percent, 10.9 percent, and 9.5 percent of the total, respectively.
Imports from China amounted to $1.77 billion, or an increase of 4.3 percent, from $1.69 billion in November 2017. Merchandise goods sourced from South Korea had an import value of $1.03 billion in November 2018. This was 13.5 percent higher than last year’s $907.60 million.
Purchases from Japan were valued at $903.28 million, 4.6 percent lower than the $946.39 million recorded a year ago.
Image credits: Nonie Reyes