Exporters project recovery in Q2
The top official of the country’s largest export group, the Philippine Exporters Confederation Inc. (PHILEXPORT), is confident the downturn in exports will not linger and that a recovery is likely this second quarter, on the back of global economic growth.
Citing the outlook of the International Monetary Fund, PHILEXPORT President Sergio Ortiz-Luis Jr. said the export sector is expected to gain momentum from global growth that is projected to reach 3.9 percent until 2019, higher than last year’s 3.7 percent.
“The weaker February performance could very well then be just the market reacting to tentative signals and certain policy pronouncements here and in major markets abroad,” he said during the group’s second quarter general membership meeting last week.
Ortiz-Luis noted the country has yet to see if there are actual adverse effects of the trade tensions between the United States and China, which can disrupt global trade.
He said the electronics sector, however, has expressed concern about its possible impact.
Correction ahead
Data from the Semiconductors and Electronics Industry of the Philippines Inc. indicated that China and the United States each accounted for more than 12 percent market share of the $32.7 billion all-time high export performance last year.
“This development may cast doubts on the possibility of a five-percent export growth this year, although we feel that there can be a correction in the second quarter,” said Ortiz-Luis.
The Philippine Statistics Authority (PSA) reported the country’s merchandise export earnings contracted for the first time since November 2016 to $4.66 billion in February, down 1.8 percent from $4.74 billion in the same month last year.
It cited lower receipts from total agro-based products, manufactures, and petroleum products.
Drivers
However, the PHILEXPORT chief remained confident the country’s exports will reach at least $122 billion in the medium term or until 2022, representing an annual average of eight to 10-percent growth.
Ortiz-Luis cited the government and private sector efforts to push export drivers, such as electronics, processed food and beverages, and services sectors, particularly the information technology-business process management (IT-BPM) sector.
He is also banking on benefits from preferential schemes like the US Generalized System of Preferences (GSP), which covers about 18 percent of Philippine exports to the country, or about $1.5 billion worth of exports in 2017.
The renewal authorizes the GSP through Dec. 31, 2020, and includes a mechanism that refunds tariffs paid from Jan. 1, 2018 through the reinstatement date of the program.