DTI raises export growth target to 15%

The Department of Trade and Industry said Wednesday it upgraded the 2021 growth target for exports of goods and services to 15 percent from an earlier estimate of 12.5 percent on improving economic fundamentals.

Trade Secretary Ramon Lopez said the growth of the export sector would be led by the business process outsourcing sector and shipments by the electronics and semiconductor industry.

“The BPO industry was instrumental to the recovery we have attained so far. They refused to lay-off workers and, in fact, expanded by providing more work using the work-from-home business model,” Lopez said at the weekly Kapihan sa Manila Bay.

He said the BPO also plans to revise the 2021 growth target to 5 percent from a more conservative growth estimate of 2 percent that the Information Technology and Business Process Association of the Philippines announced earlier in the year.

Lopez said in support of the industry, the DTI may allow the work-from-home business model to stay post-pandemic or until the economy fully recovers from recession.

He said there were also indications that the semiconductor and electronics industry may adjust its growth target to more than 7 percent, as demand for electronics shoots up in the world market.

Electronics account for almost 60 percent of Philippine exports.

The Philippine Statistics Authority reported earlier that merchandise exports jumped 20.9 percent in the first six months to $35.9 billion from $29.7 billion in the same period last year and also exceeded the pre-pandemic level of $34.6 billion registered in the first half of 2019. The figures excluded the services exports such as BPO revenues and international tourism receipts.

The DTI attributed the growth in merchandise exports to the reopening of the global markets like the US, China and the European Union, and the policy to keep the export operations at full capacity despite the lockdowns.

Lopez said to sustain the growth in the rest of the year, the department would focus on growing winning industries with greater opportunities such as high-value electronics, automotive and e-vehicles parts, processed food, minerals, other minerals, IT-BPM and creatives. The department will also meet with stakeholders to refine sectoral targets and strategies, he said.

“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,” he said.

Meanwhile, Fitch Solutions, a unit of Fitch Group, reduced its growth forecast for the Philippine economy this year to 4.2 percent from its previous estimate of 5.3 percent, taking into account the persistent risks from the COVID-19 pandemic.

It said in a report that while growth rebounded to 11.8 percent in the second quarter from the 17-percent contraction a year ago, “underlying weaknesses were evident in the 1.3 percent quarter-on-quarter contraction caused by mobility restrictions in this period.”

“The economy will face continued disruptions from the COVID-19 pandemic given its slow pace of vaccinations and difficulties containing outbreaks. With only 9.9 percent of the population fully vaccinated as of August 5, the country remains a long way off from reaching herd immunity such that it can ease preventative measures more significantly,” it said.

It said the two-week lockdown of Metro Manila in August and the heightened threat from the more infectious Delta variant led it to lower its expectations for domestic activity through the second half.

“We have lowered our forecast for household consumption growth to come in at 3.5 percent in 2021 from 4.0 percent previously, following a contraction of 7.9 percent in 2020, given subdued retail activity,” it said.

It said retail activity was already weak before the impact from the imposition of a two-week lockdown in Metro Manila. “As the lockdown measures took effect, Google mobility data reflected the steep decline in retail and recreation activity, falling to 39 percent below trend on August 6, from 18 percent a week earlier. We expect this latest outbreak to dampen the improvement in consumer sentiment…,” it said.

It said the lockdown measures were also expected to hurt government revenues and delay expenditure plans, with budgeted expenses not fully utilized by year-end.