THE PHILIPPINES will likely lag the expected rebound in exports by the biggest Southeast Asian economies, think tank Oxford Economics reported.
In a note released Monday, Oxford Economics projected that goods exports will only account for 2.7 percentage points (ppts) to gross domestic product (GDP) this year, the smallest proportion of the six major ASEAN economies, known as the ASEAN-6. The regional average is projected at 6.6 ppts.
“After a dismal 2020 for exports, we forecast a turnaround this year for the ASEAN-6 economies. Exports will make a positive contribution to growth for all six economies, but most prominently for Singapore, Vietnam, and Malaysia. In contrast, the Philippines will continue to lag the pack significantly,” it said.
Across the region, the estimated contribution of total exports to GDP was highest in Singapore at more than 15 ppts, followed by Vietnam and Malaysia at 10 ppts each, Thailand over 5 ppts. Indonesia was expected to come in below 5 ppts.
Its estimate of the muted performance by the Philippines and Indonesia was based on low recent export volumes in the two countries. Philippine exports grew 0.5% in the first quarter, compared to Vietnam’s 25.5% growth and Malaysia’s 17%.
It said the Philippines will continue to lag in agricultural exports as well, while the rest of the region expects steady growth over the near term. Philippine banana exports — which account for 38% of overall agricultural exports — have been hit hard by Panama disease and typhoons.
Merchandise exports rose 31.6% to $6.68 billion in March following a 1.5% slump in February, according to the Philippine Statistics Authority. This propped up first-quarter volume growth to 7.6%, valued at $17.56 billion.
The government’s economic managers projected an eight percent growth for the sector this year.
Across ASEAN-6, Oxford Economics said exports will boost the region’s growth this year after being a drag at the height of the pandemic in 2020, but added that the gains will not be equally felt because of the varying goods traded, different partners and the levels of competitiveness in their manufacturing sectors.
Demand for semiconductors and coronavirus-related medical products will continue to be strong over the short term, which could benefit Malaysia, Singapore and Vietnam the most.
However, the global chip shortage may slow down the sector’s growth, it said. Output for consumer goods like food and beverages could also increase drastically when pent-up demand is unleashed as economies reopen.
“We expect ASEAN-6 exports will benefit from the global recovery this year, with strong demand from the two major trading partners, the US and China,” it said.
Based on their exposure to major economies like the US, China and India, Vietnam is expected to reap the greatest benefit, followed by the Philippines, Thailand, Indonesia, Malaysia and Singapore.
Oxford Economics said its export outlook for the ASEAN-6 also reflects their competitiveness in manufacturing, with Vietnam and Malaysia being the most attractive places for foreign direct investment and the Philippines and Indonesia lagging because of weak infrastructure and unconducive business environments.
“Plugging into global supply chains, especially as firms adjust to rising costs in China, will have a significant impact on the manufacturing production of the ASEAN-6. Those that lose out in this competition will likely suffer long-term hits to both exports and growth,” it said. — Beatrice M. Laforga