DTI: Trade row hurts 2019 goods exports

Trade Secretary Ramon M. Lopez told reporters in a recent interview that total exports growth could reach 2 to 4 percent by the end of the year. This estimate includes both merchandise goods

The Philippines may end 2019 with a flat growth in merchandise goods exports, as trade tensions between the United States and China dampened demand for locally made products, according to the Department of Trade and Industry (DTI).

and services exports.

Outbound shipments of merchandise goods could post flat growth or expand by 1 percent while services exports could rise by a single digit.

“We’re not insulated [from the trade war]. [Affected is] maybe 25 percent of our exports. It’s not too big, but it still has some impact when it comes to the US-China trade war, because we are part of the

[global] supply chain,” said Lopez.

The DTI chief said the expansion of merchandise exports has been affected by the trade tensions and is affecting the country’s overall export performance.

Initially, he said the government had expected merchandise exports to grow by 2 to 4 percent this year. As trade relations between the US and China have not improved, Lopez said the figure could be lower.

Goods exports contracted by an annualized rate of 1.8 percent in 2018. The tiff between two of the country’s largest trading partners started after the US announced in July 2018 that it will slap tariffs on hundreds of Chinese products.

In July, the Development Budget Coordination Committee announced that it scaled down its exports outlook for this year. The DBCC set goods exports growth target at 2 percent due to slower global economic expansion.

Also, the DBCC set services export growth assumptions at 9 percent from 2019 to 2022.

Based on data from the Philippine Statistics Authority (PSA) in January to September, merchandise exports grew the fastest in June at 3.5 percent. Outbound shipments contracted by 2.6 percent in September.

In the nine-month period, the value of merchandise exports contracted by 0.1 percent. Exports amounted to $52.56 billion in 2018, lower than the $52.63 billion posted in 2017.

“When volumes go down, somehow [the Philippines] is affected. That is the reason for the drag [in shipments]. Even if our exports to the US and China [are growing], overall, other products are affected. This is why growth is tempered [as] some elements are affected by the trade war,” said Lopez.

Data from the PSA showed Japan was the top buyer of Philippine-made goods in September as its purchases reached $957.06 million, 19.1 percent higher than the $803.9 million recorded a year ago. It accounted for 16.2 percent of total exports in September.

Other top buyers of Philippine-made goods during the period were the US ($904.15 million), Hong Kong ($868.59 million), China ($780.24 million) and South Korea ($329.43 million).