Tougher road ahead for Philippines exporters – WB

MANILA, Philippines - Philippine exporters will likely face a tougher road ahead as big economies gear up to reinvigorate their respective manufacturing sectors, the World Bank Group said.

Roberto Galang, operations officer of the World Bank, said global economic trends are indicating the share of trade to economic growth is becoming less significant and would likely continue doing so in the coming years.

“We see a change in the way trade plays a role in this global growth. A lot of growth prior to three or four years ago was driven by exports and trade and new products coming in. In the past, as long as the economy is booming, trade follows or sometimes trade leads. That will no longer be the case because even though we’d see that growth will likely go up again in the global market, trade will no longer follow because a lot of things have changed,” Galang said during the 2015 National Export Congress yesterday.

Galang said the separation in the growth of trade and the economy is attributed to the resurgence of manufacturing in global powerhouses such as the United States and China.

“China is trying to rebalance, becoming less export-dependent and more locally dependent. We are also seeing a lot of manufacturing going back to where they are in the developed world,” he said.

“We’re going to see competition no longer from countries like Vietnam or Mexico in terms for manufacturing for the local market. Even countries like US and Germany are now reinvigorating their manufacturing sectors. These pose some negative news for exports,” Galang added.

Galang said aggravating further these challenges is the country’s exclusion from the Trans-Pacific Partnership (TPP).

“One of the things we like to warn is that two of our Asean neighbors, Malaysia and Vietnam, are members and unfortunately, we are not. This might create some problems moving forward because an investor might be seeing Malaysia and Vietnam as a very good place to sell their exports because of this TPP,” he said.

With 50 percent of Philippine exports going to TPP-member countries at present, the World Bank stressed the need for the country to upscale its export capabilities and competitiveness to continue to sell in these very important markets.

The TPP is a free trade agreement that was negotiated between the US, Australia, New Zealand, Peru, Chile, Mexico, Canada, Singapore, Brunei, Malaysia, Vietnam, and Japan.

“We need to prepare and conduct some of the reforms that the TPP requires so that we can remain competitive especially against countries like Malaysia and Vietnam,” Galang said.

Philippine Exporters Confederation Inc. president Sergio Ortiz-Luis Jr. said share of  exports to the country’s gross domestic product has now gone down to about 30 percent from a high of about 60 percent in 1998.

Philippine exports declined 24.7 percent in September, its steepest drop in four years, according to the Philippine Statistics Authority.