Philippine exports are on track toward closing the year with better numbers and sustain the sector’s improved performance in the first half as the country and the rest of the world continue to recover from the coronavirus pandemic, according to the central bank.
In an online briefing on Thursday, Bangko Sentral ng Pilipinas Governor Benjamin Diokno said that this development bodes well for the economy’s trade flows, which were hard hit by the COVID-19 crisis.
“This is due mainly to the broadening recovery in global economic activity amid extensive vaccine rollouts and hefty policy support in key economies,” he said. “Goods imports are also expected to pick up as domestic demand bounces back and as the government fast tracks its major infrastructure initiatives.”
Based on the latest balance of payments projections approved by the Monetary Board last September, exports are projected to expand by 14 percent from a 9.8 percent contraction in 2020, alongside an acceleration of goods imports by 20 percent from a 20.2-percent decline in last year.
Year-to-date figures exhibit continued recovery momentum after hitting a trough in 2020, reflecting the resumption of international trade amid sustained improvements in global and domestic demand.
Goods exports for the first half of the year have already reached pre-pandemic levels, driven mainly by manufactures, headlined by electronics, and mineral products, among others.
Nonetheless, Diokno said the outlook on goods trade remains tentative as it continues to be clouded by uncertainty over the pace of global and domestic recovery, including that of the country’s major trading and investment partners.
The near-term prospects for goods trade include the expected improvement in business confidence and consumer sentiment supported by the accelerated rollout of COVID-19 vaccination globally and the availability of effective treatments.
A spending boom is also expected as consumers tap their accumulated savings for purchases halted during the pandemic.
Meanwhile, there remains some downside risks which could weigh on the country’s exports and manufacturing prospects: the emergence and spread of more virulent COVID-19 variants which may result in renewed mobility restrictions and dampened consumer and business sentiment; prolonged supply chain disruptions and logistical bottlenecks depicted in delivery delays, raw material shortages and elevated shipping rates; and slower growth in China.
“Notwithstanding these risks, the Philippine economy has sufficient buffers against external headwinds as its external sector remains healthy,” Diokno said, noting that dollar reserves are adequate; external debt indicators are prudent; and structural sources of foreign exchange inflows, including remittances from overseas, foreign direct investment and business process outsource earnings, have recovered.