MANILA: Despite weak global demand, the Philippines is capable of achieving its exports growth target of eight to nine percent this year on the back of strong services sector, Standard Chartered Bank said.
Jeff Ng, regional economist for Asia at Standard Chartered Bank, told The STAR the Department of Trade and Industry’s ambitious exports growth target this year is attainable, but would require heavy lifting from the services sector.
So far, Ng said the country’s services exports have expanded strongly in recent years with demand for travel, computer, and financial services increasing.
“If it is combined exports then definitely there’s some potential and some challenges given that goods exports continue to face some weak demand on the Philippines top three trade partners – Japan, China and the US. Goods demand is not that great but if you look at services exports, they are 40 percent of total exports so if services exports can grow double digits it can at least offset the weakness in goods exports,” Ng said.
“So it (eight to nine percent exports growth) is possible especially if the services more than offset what the defect from exports could be. If you look at the weak demand so far, commodity prices are so low so it is weighing on the export as well. So if that reverses, we could see goods exports start to recover by the end of the year and that could be positive,” Ng said.
Latest data from the World Trade Organization (WTO) showed combined exports of goods and services of the Philippines reached $87 billion last year, nearly the same as the $86.9 billion in 2014.
Philippine merchandise exports weakened 5.6 percent in 2015 compared to 2014 due to lower demand from its top markets.
The country’s commercial services exports, however, grew to $28 billion last year, the WTO data showed.
With its robust services exports, the WTO ranked the Philippines as the 21st largest exporter of commercial services globally last year.
The EU, US, China, Japan, and India are the world’s five biggest exporters of commercial services.
Commercial services exports from the EU hit $890 billion, while those from the US and China stood at $690 billion and $229 billion, respectively.
At present, the Philippines is embarking on an export development program that aims to make total exports breach the $100-billion level by next year.
Under the Philippine Export Development Plan (PEDP) 2015-2017 signed by President Aquino, merchandise exports are expected to rise between 5.4 and eight percent this year or between $62.3 billion and $63.8 billion.
It is targeted to grow further between 6.7 and 10 percent next year or from $66.5 billion to $70.2 billion.
Services exports, meanwhile, are estimated to increase between nine and 10.3 percent this year ($29.9 billion to $30.2 billion) and between 9.9 and 12 percent in 2017 ($32.9 billion to $33.9 billion).
Combined, total exports are seen expanding between 6.6 and 8.8 percent this year and between 7.7 and 10.6 percent next year.
