August 25, 2024 | 12:00am
MANILA, Philippines — A US economic slowdown will affect the Philippines, particularly exports, according to the National Economic and Development Authority (NEDA).
While it remains to be seen if the US economy will go into recession, NEDA Secretary Arsenio Balisacan told reporters that a potential slowdown could impact the Philippines.
Weak US employment data in July heightened worries of a potential US recession.
“Of course, it will affect us. No country will be spared from a hiccup that comes from the biggest economy in the world. Our exports can suffer,” he said.
“We can also be affected indirectly by the exchange rate, the interest rate, and other channels,” Balisacan said.
Preliminary data from the Philippine Statistics Authority showed the US was the most significant destination of Philippine exports in June, with a 16-percent share amounting to $897.80 million.
In the first semester, Philippine exports to the US reached $5.82 billion.
Balisacan said the government’s thrust is to work on diversifying the country’s economic growth sources to withstand the effects of external events.
“We need to ensure that the economy is diversified enough to withstand any major shocks,” he said.
With a diversified economy, he said it can quickly rebound even if there are weather events like El Niño or La Niña, which can damage agricultural production and impact inflation.
He said the country also needs to diversify its exports.
At present, electronic products are the country’s top exports.
“I think we need to move to higher levels of semiconductors, the design and not just testing. A lot of those semiconductors that come in here are for testing and are not high in value-adding, especially labor,” Balisacan said.
Regarding other sectors that may be pushed for exports, Balisacan said there is enormous potential in food processing.
“We need to seize our advantages in services, in IT-BPM (information technology-business process management) to enhance the quality, the value-adding of our manufactured goods,” he said.
He said the country could have more design-driven manufactured exports with high-value-added components like furniture.
“If you can get those exports, you can grow our small and medium enterprises (SMEs) well. That’s what I want to see in our SMEs,” he said.
Earlier, Semiconductor and Electronics Industries in the Philippines Foundation Inc. president Dan Lachica said the group is projecting a 10-percent contraction in electronics exports this year, citing soft demand.
Exports of Philippine electronic products increased by 5.2 percent to $20.63 billion in the first half from $19.61 billion in the same period last year.
Total Philippine merchandise exports rose by three percent to $36.41 billion from January to June compared to last year’s $35.34 billion.
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