With global growth likely to remain sluggish for the remainder of 2019, the government must exert all efforts in boosting domestic demand and exports’ competitiveness to improve the Philippines’ trade performance, the National Economic and Development Authority (NEDA) said.
The Philippine Statistics Authority, an attached agency of NEDA, reported today that the country’s total merchandise trade contracted by 5.8 percent in June 2019 as the decrease in merchandise imports (-10.4%) outstripped the growth of exports (1.5%).
Imports continued its downward trend for three consecutive months now, with raw material and intermediate good, and consumer goods posting the biggest decline at -16.5 percent and -12.8 percent, respectively.
The moderate recovery of exports, on the other hand, continued for the third consecutive month. Increased sales of agro-based products, minerals, and manufactures compensated for the decline in outward shipments of petroleum products and other agro-based products.
Socioeconomic Planning Secretary Ernesto M. Pernia attributed the external trade slowdown in part to the ongoing trade disputes, Brexit-related uncertainties, and rising geopolitical tensions.
“Despite the challenging external environment, the Philippines has shown resilience in its trade performance. The Philippines is among the countries in Asia with positive export growth,” he said.
In terms of exports earnings, only Vietnam and the Philippines registered gains among selected Asian economies (China, India, Indonesia, Malaysia, Philippines, Singapore, Thailand).
“The government must continue promoting the competitiveness of the Philippine exports by implementing policies and laws such as the Philippine Innovation Act. This will encourage innovation that will reduce the cost of production and elevate the quality of Philippine products to meet international standards,” the Cabinet official added.
“However, considering the less optimistic global trade prospects, it is necessary to diversify markets and boost domestic demand to compensate for the weakness of external trade,” Pernia said.
The Cabinet official likewise reiterated NEDA’s call to diversify products and markets by establishing new trade relations and improving existing ones with strategic partners.
“In light of the current trade spat between Korea and Japan, we need to complete the negotiations for the free trade agreement with South Korea and review the decade-old Philippines-Japan Economic Partnership Agreement to further expand the country’s exports in both markets,” said Pernia.
“Importantly, the government has been fast-tracking the implementation of infrastructure projects under the Build, Build, Build program to enhance trade facilitation and provide logistical support to manufacturers and exporters,” said Pernia.
However, only 11 (of 38 NEDA Board-approved project proposals) out of the 75 infrastructure flagship projects are now in the construction phase. Further speeding up the roll-out of approved projects and processing of those in the flagship list are called for to boost government spending to provide needed stimulus to economic growth.
Pernia urged the government to also be ready with counter-measures against disruptions to construction activities that may occur from likely unfavorable weather conditions.