Exports down 3.1% in Q1; Lopez cites weaknesses

Global economic slowdown, the USChina trade war, plus inefficiencies in domestic logistics and higher costs have been blamed for the decline in the country’s export performance in the first quarter of the year.

“In general, we consider this as a reflection of the slowdown in the global economy,” said Trade and Industry Secretary Ramon M. Lopez.

Based on the latest preliminary data from the Philippine Statistics Authority (PSA), our country’s merchandise export performance in the first quarter of 2019 has declined by 3.1 percent. Electronics, which account more than half of the country’s merchandise exports, dipped by 1.7 percent to $8.8 billion. Non-electronics also decreased by 4.8 percent to $ 7.5 billion.

To show that the decline in exports was not unique to the Philippines, Lopez said that trade out of 11 trade-oriented Asian economies, 9 countries declined in their export performance and only Vietnam and China registered positive performance.

Philippine exports to Asian neighbors decreased even more with South Korea posting a negative 8.7 followed by with Indonesia with 8.3 percent, Singapore by 6.3 percent, and Japan by 3.9 percent.

Second, Lopez blamed the trade war saying the Philippines, as part of a global production network is being affected by the negative sentiments brought by the US-China Trade War, since US and China are the top trading partners.

According to Lopez, industry players said that global demand for electronic parts and final goods has been shrinking and will continue to weaken in 2019.

In the case of the Philippines, this has been mirrored in the decline of exports in certain electronics sub-sectors such as components and devices, control and instrumentation, and telecommunication products to major markets like Singapore and Hong Kong.

Meanwhile, weak orders from their principals have weighed down on major PH exporters of non-electronics such as machinery and transport as well as agribased exports (e.g., sugar and coconut). Similarly, our exports of wood manufactures continue to be hounded by weak orders from the principals of major PH exporters.

But with a robust domestic demand, the trade chief said that firms are finding more lucrative opportunities to sell in the local market.

For example, he said, a quick check with a major producer of shrimps and prawns revealed that they stopped exporting and instead concentrated their sales and distribution in the domestic market. This can partially explain the 22 percent decline in the exports of shrimps and prawns in the first quarter of 2019.

Additional feedback from major players revealed that exports in the first quarter were hampered by lingering issues they encounter on costs and inefficiencies in transport and logistics. This continues to slowdown the turnaround time in the production and shipments of exporters.

Supply issue has also affected export mainstays such as fresh and processed mangoes: Season is delayed and shortened due to double whammy of La Niña last year during flowering season and El Niño this year.

In the case of chemicals, there remains the lingering issue of the policy concerning controlled and regulated chemicals, which hampers the turnaround time of our exporters from production to market.

“As part of our action plan, we are prioritizing addressing the core issues above (i.e., supply, competitiveness, port operations/logistics, and infrastructure gaps [(e.g., R10 is now operational, etc.)] with relevant government agencies consistent with the Philippine Export Development Plan,” said Lopez.

The government is continuously working on diversifying our export offerings and destinations.

In particular, DTI is looking at focusing promotional efforts for products and services, which are considered export growth drivers. These are office equipment, consumer electronics, motor vehicle and motor vehicle parts, high-value coconut products (e.g., MCT coconut oil), forest products (e.g., plywood, fiber board, etc.), and wearables (e.g., footwear, handbags, etc.).

On services exports, audiovisual/ creative industries (e.g., film, animation, game development), healthcare information management systems, software development, and tourism-related services will receive more focus.