Philippines among leading exporters of digital services in 2022

MANILA, Philippines — The Philippines was among the leading exporters of digitally delivered services in 2022, ranking 24th globally, according to a recent report by the World Trade Organization (WTO).

In its Global Trade Outlook and Statistics report, the WTO said the Philippines had a 0.7 percent share in world exports of digitally delivered services last year with a value of $27.66 billion.

The 2022 figure is an 11 percent increase from the $24.9 billion registered in the previous year.

Global exports of digitally delivered services grew by four percent in 2022 to $3.825 trillion.  This represents a 54 percent share in total global service exports last year.

Estimates from the WTO showed that the value of global exports of digitally delivered services grew almost four-fold since 2005, rising by 8.1 percent on average per year in the period 2005-2022, outpacing goods (5.6 percent) and other services exports (4.2 percent).

According to the WTO, digital delivery includes services traded cross-border through computer networks, that is through the Internet, apps, emails, voice and video calls, and increasingly through digital intermediation platforms such as online gaming, music and video streaming, and remote learning.

“In 2022, business, professional, and technical services accounted for around 40 percent of digitally delivered services exports, followed by computer services (20 percent), financial services (16 percent), intellectual property related services (12 percent), insurance services (five percent), telecommunications services (three percent), audio-visual and other personal, cultural, and recreational services (three percent), and information services (one percent),”the WTO said.

It said Europe accounted for more than half of global exports of digitally delivered services, emphasizing that the region’s stagnating growth in 2022 largely reflects the depreciation of the euro and the British pound against the US dollar.

“Asia’s exports have been rising faster than the rest of the world. In 2022, almost a quarter of digitally delivered services originated from Asian economies, and 19 percent from North America,” the WTO said.

Similarly, Central and South America and the Caribbean as well as the Middle East saw an acceleration in growth in 2022.

“However, growth in Africa and in least-developed countries continued to lag, with Africa holding less than a one percent share of digitally delivered services exports in 2022,”the WTO said.

Meanwhile, the WTO report also showed that the Philippines exported $40 billion worth of commercial services in 2022.

The country also registered $144 billion worth of merchandise imports in the same year.

In 2022, the value of world merchandise trade rose by 12 percent to $25.3 billion.

However, in terms of volume, world merchandise trade registered a slower than expected growth in 2022 at 2.7 percent.

For this year, the WTO is projecting world merchandise trade volume to grow 1.7 percent, weighed down by the effects of the war in Ukraine, stubbornly high inflation, tighter monetary policy and financial market uncertainty.

“Trade continues to be a force for resilience in the global economy, but it will remain under pressure from external factors in 2023.This makes it even more important for governments to avoid trade fragmentation and refrain from introducing obstacles to trade,” WTO director-general Ngozi Okonjo-Iweala said.

“Investing in multilateral cooperation on trade, as WTO members did at our Twelfth Ministerial Conference last June, would bolster economic growth and people’s living standards over the long term,” Okonjo-Iweala said.

The WTO, however, noted that the 1.7 percent forecast for this year is higher than the initial forecast of one percent made in October.

It said a key factor is the relaxation of COVID-19 pandemic controls in China, which is expected to unleash pent-up consumer demand in the country, in turn boosting international trade.

“The lingering effects of COVID-19 and the rising geopolitical tensions were the main factors impacting trade and output in 2022 and this is likely to be the case in 2023 as well,” WTO chief economist Ralph Ossa said.

“Interest rate hikes in advanced economies have also revealed weaknesses in banking systems that could lead to wider financial instability if left unchecked. Governments and regulators need to be alert to these and other financial risks in the coming months,”Ossa said.

Looking ahead to 2024, the WTO forecasts trade growth to rebound to 3.2 percent, as GDP picks up to 2.6 percent.

The WTO, however, pointed out that this estimate is more uncertain than usual due to the presence of substantial downside risks, including geopolitical tensions, food supply shocks, and the possibility of unforeseen fallout from monetary tightening.