Total exports could grow by as much as 9 percent this year, the Trade department said on Tuesday, rebounding from last year’s contraction and despite a scaled-back target announced by economic managers on Monday.
Merchandise exports fell by 5.6 percent in 2015 amid a global downturn and the department, in a statement, said a 5.2 percent expansion in services exports had limited the impact on total Philippine exports to a 2.4-percent decline.
It claimed that the drop in merchandise exports was decelerating, not just for the Philippines but also in Asia, boding well for this year’s trade prospects. Approval of the 2015-2017 Philippine Export Development Plan (PEDP), it added, will provide additional support.
“The approval of the 2015-2017 Philippine Export Development Plan … provides the direction and strategies to achieve merchandise and service export growth. We are especially keen on programs intended to tap new markets and new industries,” Trade Undersecretary Nora Terrada said in the statement.
Senen Perlada, director of the department’s Export Marketing Bureau, also said: “We expect merchandise exports to get back on a growth track in 2016. Electronics exports can be expected to post moderate growth while non-electronics could snap back with the waning effects of El Nino on agricultural production and exports.”
Under the PEDP, merchandise exports are projected to grow by 5.4 percent to 8 percent this year and by 6.7 percent and 10 percent in 2017. Services exports are estimated to increase between 9 percent and 10.3 percent this year and between 9.9 percent and 12 percent in 2017.
Total exports are expected to grow by 6.6 percent to 8.8 percent this year and between 7.7 percent and 10.6 percent in 2017.
The Trade department said that for its part, it expected exports to “go beyond forecasted figures” and declared that it was “adopting a stretch target growth range of 8 percent to 9 percent for total exports in 2016.”
The optimism contrasts with that of the interagency Development Budget Coordinating Committee, (DBCC), which sets the government’s macroeconomic targets. Following a meeting on Monday, officials announced that the 2016 exports growth target had been trimmed to five percent from six percent, while those for 2017 and 2018 were set at three percent and 10 percent.
The downward revisions were part of a raft of changes focused on a reduced economic growth outlook for the Philippines. The DBCC, citing a “very challenging external environment,” trimmed the forecast for 2016 gross domestic product growth to 6.8 percent to 7.8 percent from 7 percent 8 percent.
Trade department officials were not immediately available for comment.
Bank of the Philippine Islands (BPI) associate economist Nicholas Antonio Mapa said the DBCC target of 5 percent export growth “looks more realistic.”
“[W]e will be seeing sustained weakness in external demand given the global headwinds. Perhaps base effects will help lift the print artificially given the extremely poor performance in 2015, but the demand picture looks bleak,” he said.
Mapa said he expected 5 percent to 6 percent export growth this year due to the “fragility of the external demand picture.”
“Our exports are heavily reliant on our semiconductor sector, which did see a good year in 2015 so it may be a tall order to expect them to do well again in 2016 if corporates carried out upgrading of their systems in 2015,” he said.
In the statement, the Trade department cited several strategies expected to promote exports growth this year and the next: comprehensive support packages for selected sectors; the removal of unnecessary regulatory impediments to the movement of goods and delivery of services; raising the productivity and competitiveness of Philippine enterprises; and upgrade export quality and standards.
It also claimed that the government was looking to “find ways” to improve exporters’ access to funds; exploit trade arrangements to expand market access, find new partners and develop new products; launch an export and investment promotion campaign; and “enhance the innovative capacity of the export sector through an efficient system of national innovation.”