PH cuts medium term export target by 20%

The Department of Trade and Industry (DTI) has reduced by 20 percent its medium-term export projections from $130 billion target to $103.9 billion by 2022 amid the impact of the lingering COVID-19 pandemic on Philippine industries.

In adjusting downward the export growth target set in the Philippine Export Development Plan (PEDP) 2018-2022, DTI Secretary Ramon M. Lopez acknowledged the difficulty in achieving the original goal due business disruptions amid the pandemic.

According to the DTI forecasts, goods and services exports for 2020 will shrink by 14.7% to $80.5 billion. The country's exports will then grow by 12.4% to $90.5 billion in 2021, and by 14.8 percent to $103.9 billion in 2022.

“Given that the COVID-19 disrupted several business models, it will be difficult to go achieve our pre-pandemic targets. Hence, we had to adjust our projections based also on the various inputs from industry stakeholders,” said Lopez in a statement.

Lopez had instructed the DTI's Export Marketing Bureau to review the targets.

READ MORE: PH export target under review

He shared that the travel goods, garments, and wood-based industries were hit the most because of weak global demand and a decrease in production due to COVID-19 restrictions.  

“The new projection can also be viewed as a fighting target for DTI, given the challenges of the pandemic and the emergence of new strains, and given that this is higher than the $86 billion set by the Development Budget Coordination Committee (DBCC),“ Lopez said.  

Electronic products consistently compose more than half of Philippine exports. Their association, SEIPI, assumes a -7% growth for 2020 and a +7% growth by 2021. A majority of these electronics exports are semiconductors. SEIPI’s revised targets which will impact to total goods growth rate.  

Meanwhile, Philippine services exports were based on market intelligence forecasts of 17.1% in 2020, 11.0% in 2021, and 14.8% in 2022. The Information Technology and Business Process Association of the Philippines’ (IBPAP) assumptions of -0.5% growth for 2020 and 3.5% in 2021 were also taken into account.  

Service exports will be lifted by ITBPAP’s growth forecast, as well as continued growth on health information management, content development, the creatives industry, and the expected recovery in travel related goods and services sectors due to vaccine being made available in the next two years.  

For 2020, DTI found that four industries will have positive growth rates by the end of the year. These are vehicle auto parts (15.4%), other minerals—mostly copper and nickel ore (29.9%), other fruits and vegetables (8.6%), and basketwork (28.3%). Secretary Lopez said that the DTI will focus on growing winning industries with greater opportunities such as those in high value electronics, automotive and e-vehicles parts, processed food, minerals, other minerals, IT-BPM, creatives. DTI-EMB will also meet with stakeholders to refine sectoral targets and strategies.  

Despite the bleak outlook, the DTI chief was optimistic that new investments and build-up of export capacities will be realized due to the expected immediate passage of the Corporate Recovery and Tax Incentives for Enterprises (CREATE) Act and the extension of the Bayanihan 2 We Recover As One Act. Lopez pinned his hopes that these two laws will made an impact and pave the way for the recovery of the country's exports in the next few years.

“A whole-of-nation approach and a stronger support to the private manufacturing and services industries and academe collaboration are needed to work on achieving the fighting targets set,” said Lopez.