TOTAL EXPORT GROWTH accelerated to 5.1% in the third quarter from the preceding three months’ 4.3%, boosted especially by continued strong service export growth, the Department of Trade and Industry (DTI) said in a statement on Friday.
Overseas service sales alone increased 8.6% year-on-year to $11.1 billion, while goods exports rose by 2.4% to $13.9 billion. Driving service exports in the third quarter were a double-digit increase in travel service exports due to more international tourist arrivals and a “good showing” by information technology and business process management (IT-BPM) services, the DTI said.
The nine months to Septembers saw goods and service exports growing 3.7% year-on-year to $70.4 billion. Service exports rose 7.7% to $ 30.6 billion, driven by travel services as well as technical, trade-related, and other business services, while goods exports edged up 0.7% to $ 39.8 billion primarily because of fruits and vegetables.
The Tourism department in November said foreign tourist arrivals increased by 14.4% to 6.16 million in the nine months to September from 5.39 million visitors in the same period in 2018.
The IT-BPM industry, however, tempered its revenue targets towards 2022 due to geopolitical and regulatory changes, protectionist policies, and automation. The outsourcing industry expects a 3.5-7.5% revenue compound annual growth rate from 2020 to 2022, compared to the nine percent goal set in 2016.
Service exports’ growth was expected as a consistent performer in the Philippine economy, UnionBank of the Philippines, Inc. chief economist Ruben Carlo O. Asuncion said in an e-mail. “It has been a major driver of export performance in the economy for quite some time now,” he said.
Rizal Commercial Banking Corp. economist Michael L. Ricafort noted in an e-mail that “services exports continued to be resilient in view of the availability of higher skilled workforce in the country at relatively lower cost compared to developed countries.”
“[The workforce is] a source of competitive advantage with other countries by finding market niches in the upper part of the value chain/supply chain, such as in BPOs, where the Philippines ranks second biggest in the world (after India) and the country is the world’s biggest destination of call/contact center operations.”
In terms of goods exports, DTI said that electronics products, bananas, forestry and mineral products accounted for the modest growth.
“This year’s growth recovery is a welcome development despite the major challenges brought by the US-China trade tussle,” Mr. Asuncion said.
Mr. Ricafort said that export growth continues because of improved diplomatic relations with major trading partners.
“The resilience in the country’s exports growth may have reflected the diversification of the country’s exports to new/fast-growing/fast-developoing countries in Asia, Europe, Americas, Africa and other countries worldwide that are outside the country’s traditional export markets.”
Trade Secretary Ramon M. Lopez said in the Friday statement that the Philippines is looking to expand its free trade agreements in the coming year, as the country pushes for the conclusion of the Regional Comprehensive Economic Partnership and the Philippine-Korea Free Trade Agreement.
DTI is also working on a possible free trade agreement with the United Arab Emirates and exploring export markets in Africa.
“President Rodrigo Duterte’s directive of being a friend to all nations allowed the Philippines to grow our exports despite the ongoing US-China trade war, which may have caused the decline in exports of other countries,” Mr. Lopez said.
Mr. Asuncion expects further growth going into 2020.
“As market uncertainties begin to dissipate with the partial resolution of the US-China trade war, it is anticipated that services export will continue to excel while goods export will more likely further its growth recovery.” — Jenina P. Ibañez
