By Victoria “NIKE” De Dios
Amidst the global slowdown, the Philippines has managed to make a rebound for Q3 2023.
In the data from the Philippine Statistics covering November and December, the GPCCI Market Watch edition revealed the economic overview of the third quarter year 2023 in the Philippines demonstrated growth which is attributed to the international trade, and the bilateral trade relations between the Philippines and Germany.
GDP for Q3 2023
A growth of 5.9 percent in the Gross Domestic Product (GDP) for Q3 2023 is observed and a rebound from the 4.3 percent recorded in the second quarter of 2023. Compared with other major emerging economies in Asia, the GDP growth of the Philippines for the quarter is the fastest. Subsequently, all major sectors – Agriculture at 0.9 percent; forestry and fishing at 5.5 percent; and Industry and Services at 6.8 percent posed positive growth.
Meanwhile, the household final consumption is at 5.0 percent, a deceleration from the 8.0 growth during the same quarter of last year. On the governmental expenditure, the final consumption is at 6.7 percent. The strong domestic demand despite high inflation and government spending contributed to the Q3 performance of the economy. The government expects the continued deceleration of inflation will help in attaining the low end of its GDP target of 6 percent to 7 percent for the entire year of 2023.
While the Philippine government lowered its GDP target to 6.5 to 7.5 percent from the previous 6.5 to 8.0 percent for the year 2024, the Asian Development Bank has retained its forecast of 6.2 percent. Despite cutting the GDP target for the year 2024, the government retained its GDP assumption of 6.5 to 8.0 percent for the year 2025 to 2028 and has proposed a PHP6.12 trillion national budget for the year 2025 to support economic growth.
Philippine International Trade
While challenges in logistics and supply chain remain, and the cost of raw materials and The Philippine international trade is lower this year compared with the same period of last year with Q3 exports at 19.6 Billion USD and imports at 31.5 Billion USD.
Semiconductors lead Leading in the Philippine exports in Q3 are components at 48 percent. This is followed by electronic data processing at 6 percent and other manufacturers at 5 percent. Meanwhile, minerals, fuels, lubricants, and related materials account for 16 percent of total imports. This is followed by components for semiconductors at 15 percent and transport equipment at 10 percent.
As APEC countries remain the Philippines’ major trading economic bloc for Q3 2023, exports to the United States of America accounted for the highest value at 3.20 Billion USD, followed by Japan at 2.68 Billion USD, and People’s Republic of China at 2.65 Billion. In terms of imports, the People’s Republic of China accounted for the highest value at 7.69 Billion USD. It is succeeded by Indonesia at 2.69 Billion USD and Japan at 2.49 Billion USD. In the case of Germany, it is ranked 12th as an import partner with a value of 591.62 Million USD.
Amidst global headwinds and pressures, the Department of Trade and Industry reaffirms its commitment to the Philippines’ economic development. On trade promotions, DTI Secretary Pascual highlights its strategic course of action to boost Philippine exports by mitigating production constraints, cultivating an innovative export environment, and amplifying the country’s presence in global markets. Thus, the business community remains curious as to how the government will actualize these policies catering to both import-competing and export-oriented industries.
Philippine exports to Germany are comprised mostly by components for semiconductors at 67 percent. It is followed by electronic data processing at 16 percent and machinery and transport equipment at 2 percent.
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On the other hand, transport equipment comprises 20 percent of German imports to the Philippines. Components for semiconductors follow at 19 percent, and medicinal and pharmaceutical products at 13 percent. Other commodity groups include industrial machinery equipment, and telecommunication equipment.
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Figure 4: Q3 2023 Philippine Imports from Germany by Commodity Group (Philippine Statistics Authority, 2023)
Note: Only selected major commodities are in this chart. To view the list of other commodities, you may refer to the PSA

Bilateral trade relations between the Philippines and Germany continue to foster with the recent announcement of EU Ambassador Luc Veron regarding the extension of the European Union Generalized Scheme of Preference Plus (EU GSP+) by 4 more years as the commission conducts negotiations for new regulation. The Philippines has been benefitting from the preferential trading scheme and its extension ensures that more than 6,274 local exports – including tuna facing a potential 20%-30% tariff – will continue to enjoy the program’s privileges.
Consequently, there have been reports of preliminary discussions or scoping talks for a Free Trade Agreement (FTA) between the EU and the Philippines following the visit of European Commission President Ursula von der Leyen. DTI Secretary Pascual underscores the importance of addressing market access for goods and services, investment liberalization, trade and sustainable development, government procurement, and dispute settlement for the upcoming bilateral discussions. With the EU being a pivotal trading partner of the Philippines, the business sector is eager to know more about the next steps of both governments on the attainment of an FTA.
The Fall 2023 AHK World Business Outlook (WBO) Survey Results
The AHK World Business Outlook (AHK WBO) is based on a regular DIHK survey among member companies of the German Chambers of Commerce Abroad, delegations, and representative offices (AHK). Here are some highlights from the results of the recently conducted Fall 2023 AHK World Business Outlook (WBO) Survey:
Businesses identified these three as their biggest risks for their economic development: prices of energy (38 percent), demand (37 percent) as well as lack of skilled workers (37 percent), and exchange rates (32 percent) along with policy conditions (32 percent).
The areas for significant investment are Sales and Marketing (42 percent), Services (e.g., shared service center) (37 percent), and Research and Development (25 percent). The factors considered in investment decision-making are Market Size/Market Development (56 percent), Local Economic Policy Framework (33 percent), and Diversification (29 percent).
Cumbersome Customs Procedures (39 percent) followed by Tariffs and Quotas (37 percent) and Technical Trade Barriers (conformity testing and certification) (36 percent) are challenges posed by companies when exporting goods and services.
Around 46 percent of businesses anticipate the EU-Philippines Free Trade Agreement (FTA) to be crucial for their operations. Companies are anticipating the following areas under the EU FTA to be utilized: Trade in Goods (58 percent), Trade in Services (51 percent), and Supply Chain Optimization (36 percent). Overall, 46 percent of the respondents anticipate the EU-Philippine FTA to be moderately increasing their company’s competitiveness.