Much talk has been made recently about rising trade tensions putting a hamper on global economic growth among businessmen and financial experts. Releasing a report in July, the World Trade Organization (WTO) recognized the international economic threats posed by trade restrictions among the G20, an international forum for the governments and central bank governors from 20 countries.
“This continued escalation poses a serious threat to growth and recovery in all countries, and we are beginning to see this reflected in some forward-looking indicators,” WTO Director-General Roberto Azevedo said in a statement.
In essence, trade barriers being erected by major economies around the world was jeopardizing the economic recovery of everyone and their effects are already starting to show. The WTO found that G20 countries introduced 39 new trade restrictions between mid-October last year and mid-May this year, double the rate in the previous period, affecting trade in iron and steel, plastics and vehicles.
“The marked increase in new trade restrictive measures among G20 economies should be of real concern to the international community,” Mr. Azevedo said, adding that more restrictions had been put in place in the weeks after the period under review ended.
In spite of this, emerging economies like the Philippines are rising to the occasion, defying naysayers and putting forward hope in a somber world. In Bloomberg’s New Economy global survey released last October, which interviewed 2,000 business professionals in 20 markets, it showed that 63% of respondents coming from emerging economies expressed confidence in the future of global trade, a far cry from the 36% of respondents from developed economies sharing the same sentiment.
Such a stark difference is not insignificant. Bloomberg Chief Economist Tom Orlik said that for emerging markets, the costs of looming tensions in international trade perhaps could be less than expected.
“If businesses retain that fundamental optimism about the outlook for trade, continued hiring and investment could propel growth forward, even as tariff barriers rise,” he said.
Technology, according to the survey, plays an integral role in keeping such economies afloat. Artificial intelligence, upskilling work forces, and adding improved professional courses could serve as the ballast from which countries could build a better future for global trade.
Over half (51%) of respondents for the Philippines believed that global trade will soon be restored. Three-quarters (76%) strongly believe that international trade will continue to grow in the next five years. Eighthy-four percent of respondents in the Philippines are already in the process of adopting new technologies.
This is despite the country’s merchandise trade deficit lingering above the $3-billion mark for the fifth straight month this year in August. Data from the Philippine Statistics Authority showed that while export growth that month posted its best performance for this year so far, and was the third straight month of positive performance, import growth also posted the slowest in five months.
Overseas sales of Philippine goods in August rose by 3.089% year-on-year to $6.163 billion, outstripped by an 11.034% hike in value of inbound foreign goods to $9.677 billion. The resulting $3.513-billion deficit in trade in goods was 28.393% bigger than the $2.737 billion recorded last year.
Year to date, exports slowed 2.049% to $44.908 billion while imports grew 15.043% to $70.911 billion, pushing the merchandise trade gap up 64.668% to $26.003 billion. The government has projected an export growth target of nine percent for 2018, while imports are targeted at 10%.
The country is in it for the long haul. In the 2018 Hinrich Foundation Sustainable Trade Index released, which measured the long-term trade sustainability of 19 Asian economies and the United States, the Philippines placed 10th, beating out countries like Malaysia and Thailand.
“The Philippines was a top performer among the low-income economies in the 2018 Index, outperforming the middle-income economies of Malaysia and Thailand in overall scores,” the Hinrich Foundation wrote on its profile report on the Philippines.
The Hinrich Foundation is a nonprofit organization that undertakes trade-related policy research and development work in Asia. It commissioned The Economist Intelligence Unit (EIU) to build the Sustainable Trade Index.
The Index uses 24 indicators to measure 19 economies in Asia and the US across the three recognized pillars of sustainability: economic growth, social capital, and environmental protection. It measures the readiness of each economy to participate in global trade in a way that creates sustainable growth and attracts foreign direct investment, and funding and support from multilateral development agencies.
And while the country has seen its economic pillar fall by six notches to where it was in 2016, it was recognized for its improvements on the social capital pillar, particularly because of an overall stagnation in the area across the region. Its ranking in the social pillar went up by eight spots from rank 19 in the 2016 report to rank 11 this year.
The Philippines was also recognized by the report as the most-educated population among low-income economies on the index.
“Inequality and political instability are on the rise across the region, a trend that transcends wealth and development status. The Philippines, however, was one of the few economies to increase its ranking on the social pillar in 2018,” the report noted.
“The country even outperformed middle-income countries like China, Thailand and Malaysia on the social pillar, outperforming its income-weighted position to deliver an impressive social pillar performance.” — Bjorn Biel M. Beltran