The doubling of the country’s international trade volume in April 2021 after both imports and exports registered the biggest increases in more than a decade could be a signal that both the domestic and global economy are headed for recovery.
The country’s total external trade in goods accelerated by 107.3 percent in April this year to $14.16 billion from $6.83 billion in the same month in 2020. This was faster than the 26.5 percent annual growth registered last March and a reversal of the 54.8 percent contraction seen in the same month last year.
According to the Philippine Statistics Authority (PSA), 59.7 percent of the total external trade were imported goods, while the rest were exported products.
Local manufacturing is evidently ramping up after more than a year of alternating quarantine phases that have hampered the reopening of the economy since the onset of the pandemic, observed the Department of Trade and Industry (DTI). The volume of imports of manufacturing inputs such as raw materials and intermediate goods has doubled at 118.6 percent and 104.8 percent, respectively, based on year-on-year data.
The record increase attained in April 2021 was due to the increase in all of the top 10 major community groups, which was led by transport equipment (547.4 percent), the PSA reported. Most of the imported goods were electronic products with an import value of $2.41 billion, followed by mineral fuels, lubricants and related materials valued at $841.9 million, and transport equipment at $614.7 million.
The $5.71 billion in export trade volume recorded for April 2021 surpassed the amount of $5.65 posted in pre-COVID 2019. The DTI also pointed out that the country’s trade growth figures were the highest among selected ASEAN economies, and even eclipsed Japan’s 38 percent and China’s 32.3 growth performance.
Greater access to global markets is being targeted by the DTI in order to enable the country to ride the waves of economic revival. The Regional Comprehensive Partnership (RCEP), a free trade agreement between the ASEAN countries and five major economies – China, Japan, South Korea, Australia and New Zealand – promises to be a major growth driver for the Asia-Pacific region.
The RCEP countries account for about 30 percent of the world’s population and a combined gross domestic product of $23.5 trillion. The DTI is confident that the Philippines could position itself as a hub for manufacturing, investment, and innovation, aside from being a training and education center in this nascent free trade area.
DTI’s timetable for presidential approval and Senate ratification of the RCEP is between July to November 2021 – a tight schedule that could be derailed by the start of the political campaign for the May 22 national elections.
Whether these upbeat signals could be sustained depends importantly on the pace and efficiency of the vaccine rollout. The vaccination of essential workers in key sectors – especially if achieved in tandem with further improvements in disease containment – could bring about the desired economic turnaround that has been slowed by continuing quarantine restrictions.