By Monsi A. Serrano
After a slowdown in exports due to the coronavirus pandemic, the Philippines is set to snare the trade growth and sustain the momentum through opportunities in the Asia region. The seesaw trend in our export performance during the pandemic and the opening of the economy in 2022 prompted exporters in the Philippines to expand our markets and products and create more free trade agreements (FTAs) with other countries to address this issue.
The Philippines is among the countries that benefited from strong trade growth with developing Asia as the continued recovery in exports supported economies in the region during the first half of 2024, according to the Asian Development Bank (ADB).
In its Asian Development Outlook (ADO) September 2024 report, the ADB said exports to developing Asia contributed significantly to goods export growth in most Asian economies.
The Philippines added 8.5 percentage points to its export growth rate. Hong Kong, China and Singapore gained most from intra-regional trade, which added 11.8 percentage points and 8.8 percentage points to export growth, respectively, it said.
The ADB said exports from developing Asia continue to increase steadily, led by high-income technology exporters.
“Goods exports have regained momentum, recovering from a 3% contraction in March to 8% growth in July. High-income technology exporters and the PRC (People’s Republic of China) drove the rebound,” it said.
The report said goods exports from the rest of developing Asia are growing, albeit more moderately, while services export growth has remained steady and is primarily underpinned by tourism.
It said global demand for electronics has continued to support export growth in developing Asia.
“High-income technology exporting economies continue to benefit from the upturn in the global semiconductor cycle, driven in part by rising investment in artificial intelligence (AI), which is causing spillovers along the industry’s value chain. Electronics are the largest contributor to goods export growth in a number of economies,” it added.
The report further said the contribution of electronics to export growth is high in the Philippines and Singapore, 5.4 and 4.6 percentage points, respectively.
According to World Bank, the export contributes 26.65% of the country’s gross domestic product. While the report of the Asian Development Bank covers Asia, investment and trade opportunities in other regions such as Europe are also available and this was also mentioned by former EU Ambassador to the Philippines Luc Véron.
He noted that the Philippine exporters can earn as much as P122 trillion under the European Union’s Generalized Scheme of Preferences Plus (GSP+) program.
Another source of export growth for the Philippines is the ongoing Free Trade Agreement with the Republic of South Korea which is currently under discussion. Then the most recent one is the current, UAE trade agreement with the Philippines will open more economic engagements in the Middle East.
“The Philippines is benefiting from its continued involvement in lower value-added segments such as assembly, testing, and packaging,” it said.
The ADB said exports of non-electronic goods remained mostly robust, although low mineral prices held back export revenues in some commodity exporters.