Weak exports to persist until 2017 – EDC

The government and the private sector have agreed to slash the country’s exports growth target for this year and next.

Following a meeting last Friday, the multi-sectoral Export Development Council (EDC) decided to cut this year’s exports growth target to three percent from its original forecast of 6.6 to 8.8 percent, Trade Undersecretary Nora Terrado said in a text message over the weekend.

Outbound shipments of merchandise are forecast to finish flat this year while that of services are expected to increase nine percent.

For next year, the EDC has likewise decided to revise its 7.7 to 10.6 percent growth target to three percent, which is similar to this year’s growth expectations.

“Our EDC agreed to revised targets based on midyear review. EDC decided to be a bit more conservative this time considering continuing sluggish global demand and world trade which impact many economies including the Philippines,” Terrado said.

“Both the export sectors and government agencies can use this time to work on implementing the eight strategies defined in the Philippine Export Development Plan such as the ease of doing business, product development, upgrading quality standards, and capacity building to prepare for the recovery stage,” she added.

DTI export marketing bureau director Senen Perlada said in an interview last week the continuing weakening of global demand has hurt Philippine merchandise exports for more than a year now.

He said even though the country’s strong services sector is capable of pulling total exports into the positive territory, it is not enough to bring it to the level which the country was originally targeting.

The private sector, for its part, remain optimistic that the exports sector can still post modest growth despite sluggish global economy given the new administration’s adoption of more micro, small and medium enterprise-friendly reforms.

Philippine Exporters Confederation Inc. president Sergio Ortiz-Luis Jr. said he hopes that some pronouncements of President Duterte, particularly on streamlining business procedures and promoting transparency, could boost the growth of the export sector.

“Already, certain pronouncements are again making exporters bullish despite challenging global developments such as the Brexit or British exit from Europe and the still recovering economies of the United States and China,” Ortiz Luis said.

Ortiz-Luis said the bearish economies of the US and China have adversely affected the country’s exports.

The country’s exports dropped for the 14th consecutive month in May as it suffered 3.8-percent decline to $4.71 billion due mainly to the sluggish global economy and effects of the El Niño.

As to the impact of Brexit, Ortiz-Luis said the group expects some short-term trade diversion as Britain gets isolated from the European Union trade agreements the Philippines has signed.

“But we anticipate the medium to long-term benefits as we pursue bilateral trade agreement with Britain that may cover the same grounds we may have lost from this development,” he said.

“Against these backdrops, the new department heads are all fired up restructuring and setting the pace towards a more efficient system that hopes to create positive ripple effects to the economy, especially the poorest in society,” Ortiz-Luis added.