By THEPHILBIZNEWS STAFF
As countries across the world mitigate the impact of the coronavirus disease 2019 (Covid-19) with strict containment measures, weak international trade will result in lower levels of goods exports and imports in the Philippines, according to the World Bank’s Philippines Economic Update.
“Global trade is suffering one of the worst contractions in post-war history in 2020. The Covid-19 pandemic has caused disruptions to international travel and global value chains,” said the report titled Braving the New Normal.
“The Covid-19 outbreak further weakened merchandise exports amid disruptions in global value chains and as global trade slowed down affecting Philippine exports of agriculture, fisheries products and manufacturing goods,” it added.
The report said Philippine export growth started to weaken in 2019 due to trade tensions and slower global growth.
Demand for tourism services, which accounted for 12.1 percent of gross domestic product (GDP) in 2018, and adjacent industries fell suddenly in the first quarter of 2020, and it “will remain low as long as countries continue to restrict travel”, it said.
The World Bank sees subdued growth prospects for the business process outsourcing (BPO) industry while receipts will likely be maintained as the sector remains open for business.
The report said growth in foreign remittances may also decelerate as laid-off workers repatriate and the economies of source countries are disrupted by the pandemic.
“The current-account deficit is projected to settle at 0.5 percent in 2020 due to weaker services exports and remittance inflows, before widening in 2021-22 as the economy normalizes and imports rise, including for domestic infrastructure projects,” it added.
Service exports contracted by 4.3 percent year-on-year in the first quarter of 2020 reflecting travel restrictions imposed in the Philippines and globally that resulted in a 40-percent decline in international tourist arrivals.
Meanwhile, imports also contracted given weaker growth in capital goods imports due to lower domestic investment activities, and in raw and intermediate goods imports reflecting disruptions in global value chains.
