Exports recovery may take 2 years

By Jenina P. Ibañez, Reporter

PHILIPPINE EXPORTS’ return to growth could be as far away as 2022 after the effects of the pandemic caused a slowdown in operations that will likely prompt the government to revise its export targets for the next few years.

Department of Trade and Industry Export Marketing Bureau (DTI-EMB) Director Senen M. Perlada said Philippine exports could take several years before returning to growth, possibly returning to positive territory in 2022 if it manages to remain flat next year.

This is due to a lack of subsidies for an export sector that had slowed operations during the lockdown, he said in a phone interview on Friday. The export sector was allowed to continue limited operations during the strictest lockdown that started in mid-March.

While he had previously said that DTI-EMB will retain its exports forecast, Mr. Perlada said the department will “move along the same direction” as the Development Budget Coordination Committee (DBCC) which cut its projections.

In July, DBCC’s forecast for 2020 said merchandise exports will contract by 16%, revised from the earlier projection of -4%. It maintained its 5% growth estimate for 2021-2022.

The Philippine Export Development Plan 2018-2022 approved by President Rodrigo R. Duterte in July last year targets a compound annual growth rate of 8.89-9.96% for goods and service export revenues to $122-130.8 billion in total by 2022.

“There’s nothing that I can see that will really enable us to meet those, not even the lower end of the target,” Mr. Perlada said, noting that a realistic forecast would include National Government and private sector revisions.

Merchandise exports shrank by 13.3% to $5.33 billion in June after a 26.9% yearly decline in May, preliminary trade data from the Philippine Statistics Authority showed. For the first half, goods exports were down 17.8% to $28.43 billion.

For full-year 2020, DTI-EMB said goods exports could drop by 28.6%, while overall exports could fall by 21.4%.

Mr. Perlada expressed hope that electronics exports will bounce back quickly, since it will drive recovery in merchandise exports.

But electronics exports have remained low, declining by 10.4% to $3.18 billion in June even as it improved after it slipped by a third to $2.29 billion in May. Electronics exports accounted for more than half of the country’s goods exports.

In a mobile message on Friday, Semiconductor and Electronics Industries in the Philippines Foundation, Inc. (SEIPI) President Danilo C. Lachica said that the industry hopes to temper the exports decline.

“This will depend on the state of quarantine and any additional protocols we have to comply with. As it is, workforce attendance and supply chain have not stabilized,” he said.

GROWTH IN 2021?
In contrast with the government, private sector exporters expect some growth by next year.

“Next year, parang medyo confident kami na baka mag-positive na tayo (Next year, we’re somewhat confident it will turn positive),” Philexport President Sergio R. Ortiz-Luis, Jr. said in a phone interview on Friday.

Mr. Ortiz-Luis said the resumption of operations has been slow due to restrictions like the lack of public transportation for employees, but growth next year could depend on market recovery, as he expects electronics and mining exports demand to return.

Garments and houseware export orders have also been improving, he added.

For Mr. Perlada, one solution to the export contraction is “massive digitalization” or fulfilling export orders online at a larger scale.

“Everybody else is doing that. Ang kalaban mo talaga kasi (the enemy) is consumer confidence, and everybody’s going to be working against that,” he said.

He targets Chinese markets for digital-based exports of food and beverages, processed agricultural products, and creative goods.

“China’s going to really fuel the consumption. Precisely, China has embraced digital so kailangan tayo sumabay doon (we need to keep up).”