Philippines’ trade recovery continues to lag

By Jenina P. Ibañez, Reporter

PHILIPPINE EXPORTS likely fell by 8.7% in the third quarter, the United Nations Conference on Trade and Development (UNCTAD) said, as lockdown restrictions continue to weigh on recovery.

In its Global Trade Update report released on Tuesday, UNCTAD said global trade showed a frail recovery as it dropped by 4.5% year on year in the third quarter, easing from the 19% drop in the second quarter.

“Global trade is expected to fall by 7% for 2020, with a lower bound of 9% due to persisting uncertainty,” UNCTAD said.

“The lower bound for 2020 is at about 9% and considers the possibility of a resurgence of the COVID-19 pandemic during the coming months and the prospect of a deteriorating policy environment, with sudden increases in trade restrictive policies.”

Out of 30 economies covered by the report, the Philippines likely recorded the 10^th largest export decline in the third quarter, based on UNCTAD estimates.

In the eight months to August, Philippine exports fell by 16.6% to $39.29 billion compared with the same period last year, according to preliminary data from the Philippine Statistics Authority.

The decline i merchandise exports’ decline could continue to weigh on overall economic growth, as it accounted for 14.1% of gross domestic product last semester.

Philippine trade recovery is lagging behind because of the length of the lockdown, Department of Trade and Industry Export Marketing Bureau Director Senen M. Perlada said in a phone interview on Wednesday.

The country’s lockdown, which started in mid-March, is one of the longest and strictest in the world.

“Those economies that opened earlier or do not have as severe a lockdown as us… were able to fare better in exports,” Mr. Perlada said. “For those countries that opened earlier and have less stringent lockdowns — people can move, transportation is open, people can go to work, the retail establishments are okay, then they have recovered faster in exports.”

The Philippines continues to experience supply chain and logistics problems, even as lockdown restrictions were eased.

“Even the costs of logistics of transport, tumaas pa sa atin (went up here),” Mr. Perlada said, adding that exporters in the provinces that ask technicians to install imported equipment have to go through redundant quarantine and COVID-19 testing measures across local governments.

The delays have increased the cost of doing business, he added.

Mr. Perlada said the lack of available exports is an issue, where importers may choose to select the same goods from other countries if they cannot get them from the Philippines.

“Kung sino ’yung available, ’yun ’yung makikinabang (whoever is available benefits),” he said.

Philexport President Sergio R. Ortiz-Luis Jr. in a phone interview also said that the longer and strict lockdown as well as high shipping costs in the country are holding back Philippine trade.

“Specifically, mabigat ang shipping costs natin dito at mabigat ’yung operations natin dito dahil aside from the lockdown, walang (public) transportation (The shipping costs are higher and the operations are more difficult because aside from the lockdown, there is no public transportation),” he said.

Meanwhile, the UNCTAD report showed the Russian Federation and Colombia likely had the biggest exports drop at 19% and 13.3%, respectively, during the third quarter.

Only Vietnam (10.9%), China (8.8%), Taiwan (6.4%) and Turkey (0.7%) showed growth in exports in the July to September period.

The report said that China’s trade trend diverges from other economies as it stabilized in the second quarter and rebounded by the third.

“Overall, the level of Chinese exports for the first nine months of 2020 was comparable to that of 2019 over the same period,” UNCTAD said.

UNCTAD said the decline in international trade in the second quarter was similar for both developing and developed countries, but the trade decline was faster in developed countries while trade between developed countries has been more resilient.

By sector, the automotive and energy industries’ trade in the second quarter was half of what was in the same period last year. Chemicals, machineries, metals and ores, and precision instruments trade have also decreased significantly.

In contrast, office machinery, textiles, and apparel imports increased, as they cover home office equipment and face masks.