THE country’s prospects of seeing export earnings rise to $100 billion are dim, with local economists highlighting the global economic slowdown and issues surrounding the local manufacturing industry among the biggest challenges for attaining this.
On Tuesday, the Philippine Statistics Authority (PSA) reported that the country’s exports grew 20 percent in October 2022, the highest since May 2021 when exports rose 30.8 percent. The country’s export earnings reached $7.695 billion in October 2022, higher than the $6.41 billion posted in October 2021. (Full story: https://businessmirror.com.ph/2022/12/13/electronics-helps-phl-export-earningspost-highest-growth-since-may-2021/)
However, merchandise export earnings between January and October this year have only reached $66.01 billion, representing a slim 6.3 percent growth compared to the $62.1 billion posted in the same period last year.
“I don’t think we can [attain a $100 billion-worth export earnings]. $80 billion perhaps [may be more likely given the] anticipated recession next year,” former University of the Philippines School of Economics Dean Ramon L. Clarete told the BusinessMirror.
Ateneo de Manila University economist Leonardo Lanzona Jr. told this newspaper that signs of the global recession are already palpable given the slower growth of the country’s imports.
PSA data showed Philippine import bill grew 7.5 percent to $11 billion in October 2022 from $10.23 billion in October 2021. Per data, this is the slowest growth of imports since January 2021 when purchases from the country’s trade partners contracted 11.8 percent.
“The decline in imports reflects the global economic slowdown. If imports had risen, the rise in exports could have been seen as more permanent. However, since imports have declined, the increase in electronic exports are likely coming from inventories,” Lanzona said.
The growth in the country’s exports, Lanzona said, may owe to base effects which are expected to “dissipate over time.” He noted that this is part of the same effects that led to recent improvements in the country’s GDP growth.
Clarete said the improved export performance may also be associated with China’s recent electronic manufacturing problem associated with the Covid-19 lockdown and labor relations.
“[There is a] need for downstream firms to diversify its sources away from China,” Clarete said. “[There is an] anticipated recession of the global economy. I disagree that recession is going to be prolonged but I’m in the minority.”
Based on data obtained from the PSA, the country’s merchandise exports peaked in 2021 at $74.65 billion. This is the highest export earnings registered by the country in 42 years.
The PSA’s data also showed that the lowest export growth since 1980, meanwhile, was $5.01 billion posted in 1983 followed by $5.02 billion in 1982.
Commodities
The country’s export performance in October was mainly driven by the 39.6-percent growth in shipments of Electronic Products. This was due to the 62.7-percent growth in semiconductors.
The PSA noted that electronic products accounted for 66.3 percent of total exports in October while semiconductors accounted for 55.8 percent of the total.
Other commodities that posted high growth in October were iron and steel, soaring 571 percent; other products manufactured from materials imported on consignment basis, 145.3 percent; copper concentrates, 136.8 percent.
In terms of imports, PSA data showed electronic products contracted 0.4 percent while semiconductors grew only 8.8 percent.
Electronic products accounted for 26.2 percent while semiconductors accounted for 20.1 percent of all exports in October.
Nonetheless, the importation of commodities such as metalliferous ores and metal scrap surged 462.7 percent in October, followed by artificial resins, 316 percent; chemical compounds, 187 percent; and other special transactions, 111.9 percent.
PSA data also showed that by major type of goods, exports of manufactured goods shared the biggest to the total exports in October 2022 amounting to $6.57 billion or 85.4 percent.
This was followed by mineral products with a share of $548.58 million or 7.1 percent; and total agro-based products, which contributed $425.57 million or 5.5 percent.
Meanwhile, by major type of goods, imports of raw materials and intermediate goods accounted for the largest share of total imports amounting to $4.26 billion or 38.7 percent in October 2022.
PSA data also showed imports of capital goods ranked second with a share of $2.88 billion or 26.2 percent, followed by consumer goods with $1.89 billion or 17.2 percent.
Markets
The country’s largest export market in October was Hong Kong, which comprised the highest export value of $1.28 billion or a share of 16.6 percent to total exports during the month.
The top five major export trading partners also included the United States of America (USA), $1.18 billion or 15.3 percent of the total and Japan, $999.67 million or 13 percent of the total.
The list also includes the People’s Republic of China with $959.59 million or 12.5 percent of the total and Singapore, $438.03 million or 5.7 percent of total exports in October 2022.
For imports, China was the country’s biggest supplier of imported goods valued at $2.22 billion or 20.2 percent of the total imports in October 2022.
The top five major import trading partners in October were Indonesia with $1.27 billion or 11.5 percent of the total; Japan, $1.01 billion or 9.2 percent; Republic of Korea, $920.05 million or 8.4 percent; and USA, $767.87 million or 7 percent of total imports.
Earlier, the Philippine Exporters Confederation Inc. (Philexport) said earnings from exports of goods and services this year could reach nearly $100 billion.
Philexport President Sergio Ortiz-Luis Jr. told reporters that the value of the country’s exports this year would still surpass last year’s receipts of $87 billion despite the 2-percent decline in export earnings in August (Full story: https://businessmirror.com.ph/2022/10/13/export-earnings-seen-to-hit-100-billion-this-year/).
Image credits: Qilai Shen/Bloomberg