The Asian Development Bank (ADB) said the outlook for Philippine exports remains weak amid lackluster economic prospects in major trade partners, but imports can pick up speed driven by continued strength in domestic consumption and a recovery in investment.
In an update of its flagship annual economic publication, Asian Development Outlook (ADO) 2019, ADB particularly cited trading partners of the country, including Japan, which accounts for 15 percent of exports; and the European Union, which accounts for 12 percent.
“As exports remain sluggish, imports of raw materials and of parts and components used mainly to manufacture exports should remain subdued too,” the Manila-based multilateral bank said.
However, the bank noted that imports of both consumer and capital goods could be accelerated by continued strength in domestic consumption and a recovery in investment.
“Strength in net service exports and remittances from overseas workers should continue to cushion the trade deficit somewhat. The current account deficit is expected to be narrower than foreseen earlier, equal to 1.7% of GDP (gross domestic product) in 2019 and 2.0% in 2020,” it added.
ADB slightly reduced its economic growth forecast for the Philippines this and next year amid the slowdown in domestic investment in the first half of 2019 mainly caused by the delayed passage of the 2019 national budget, which held back public expenditure, particularly on infrastructure.
Its forecast for Philippine GDP growth is now 6 percent in 2019 and 6.2 percent in 2020, against the previous forecast of 6.4 percent for both years.
The bank revised down economic forecasts for Southeast Asian countries from 4.9 percent to 4.5 percent for this year, and from 5 percent to 4.7 percent for next year.
“With escalation in the US-PRC (United States-People’s Republic of China) trade conflict, weakening global activity and trade, and a downturn in the electronics cycle, a significant export slowdown in the first half of the year hit the whole subregion except Cambodia,” it said.
The multilateral bank added softening domestic investment exacerbated export woes in most larger subregion economies, including the Philippines, but domestic consumption held up well to cushion the slowdown.