$300 million drop in Philippines exports seen as virus spreads

MANILA, Philippines — The Philippines, among the most affected economies by the slowdown in production in China due to the COVID-19 outbreak, could see a $300 million drop in exports, the United Nations Conference on Trade and Development (UNCTAD) said.

UNCTAD’s technical note titled ”Global trade impact of the coronavirus epidemic,” showed the Philippines ranked 18th among economies most exposed to the supply chain disruptions in China due to COVID-19.

UNCTAD estimates the impact on Philippine exports to be at $300.4 million.

In terms of sectors in the country to be affected, UNCTAD estimates the biggest impact for communication equipment at $115 million, followed by office machinery at $76.8 million, and electrical machinery at $41.8 million.

Other sectors seen to be affected are automotive ($22 million), leather products ($800,000), machinery ($16.9 million), metals and metal products ($1.7 million), paper products and publishing ($200,000), chemicals ($6.6 million), precision instruments ($16.6 million), rubber and plastics ($800,000), textiles and apparel ($500,000), and wood products and furniture ($700,000).

Data from the Philippine Statistics Authority showed the country’s merchandise exports reached a record-high of $70.3 billion last year.

UNCTAD estimates the slowdown in China’s manufacturing activity due to COVID-19 could lead to a $50 billion decrease in exports across global value chains.

The five economies seen to be affected the most by a reduction in China’s productive capacity are the European Union ($15.6 billion), US ($5.8 billion), Japan ($5.2 billion), South Korea ($3.8 billion), and Taiwan ($2.6 billion).

Globally, sectors seen to be hit the most are precision instruments, machinery, automotive and communication equipment.

More than the threat to human life posed by COVID-19, which was first detected in Wuhan in China last year, the outbreak also brings risks to the global economy including trade.

While the COVID-19 outbreak is contained mostly within China, UNCTAD said reliance by companies on Chinese suppliers shows any disruption in China would also be felt outside the country’s borders.

“A reduction in Chinese supply of intermediate inputs can affect the productive capacity and therefore the exports of any given country depending on how reliant its industries are on Chinese suppliers,” UNCTAD said.