If not for the global economic crisis, the last five years would have been a favorable period for exports. The country's exports grew by an average of 10.65 percent from 2004 to 2007, supported by continued strong growth in global trade. The expected negative effect of the 9/11 terrorist attacks in 2001 was mitigated by the renewed confidence on safer trade as ensured by more stringent export regimes of the European Union (EU) and the United States (US).
Export growth peaked in 2006, when exports surpassed targets and grew by 18.3 percent, driven by rising sales to the country's traditional trading partners, the US and Japan, as well as China, the Netherlands, Germany, Singapore, Malaysia and Korea. This pace could not be sustained in the following years, owing to the slowdown in the US market, high production costs, particularly in energy and logistics, and a strong peso.
In the fourth quarter of 2008 the sector felt the effects of the global economic crisis, actually contracting by 2.19 percent relative to 2007. As the global recession dragged on in 2009, export value fell drastically, contracting by 16.1 percent compared to 2008. In 2010, however, exports began to rise again, surging ahead with two-digit growth rates in line with the expectations of global economic recovery (Table 3.2).
For 2010, merchandise exports amounted to US$48.3 billion, growing 34.8 percent over exports in 2009. This was supported by increases in exports of manufactured goods and total agro-based products, both at about 36 percent. The country's top ten export commodities also registered increases particularly coconut oil, communication/radar and semiconductor devices. Exports registered positive growth with the recovery of global trade.
The movement of Philippine electronic exports has followed global trends. Electronic products still account for the bulk (61 %) of Philippine merchandise exports during the period. Semiconductor shipments, making up 77 percent of electronics exports, grew 53 percent in 2010.
Table 3.2: Export Performance (2004-2010)
FOB Value (US$ billion) | Growth Rate (%) | |||||||||||||
| 2004 | 2005 | 2006 | 2007 | 2008 | 2009 | 2010 | 2004 | 2005 | 2006 | 2007 | 2008 | 2009 | 2010 |
Goods & services |
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Plan target | 43.1 | 47.4 | 52.3 | 58.2 | 65.4 | 74.3 | 84.3 | 10 | 10 | 10 | 11 | 12 | 12 | 13 |
Actual | 42.8 | 44.8 | 52.9 | 59.2 | 57.9 | 48.6 | 63.9 | 10.6 | 4.6 | 18.3 | 11.9 | -2.2 | -16.1 | 31.5 |
Percent to target (%) | 99.3 | 94.5 | 101.3 | 101.9 | 88.6 | 65.4 | 75.8 |
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Of which: goods |
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Plan target | 39.8 | 43.8 | 48.2 | 53.5 | 60.0 | 67.1 | 75.8 | 10 | 10 | 10 | 11 | 12 | 12 | 14 |
Actual | 38.8 | 40.3 | 46.5 | 49.5 | 48.3 | 37.6 | 50.7 | 9.8 | 3.8 | 15.6 | 6.4 | -2.5 | -22.1 | 34.8 |
Percent to target (%) | 97.5 | 91.9 | 96.5 | 92.5 | 80.4 | 56.1 | 66.9 |
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Source: Bangko Sentral ng Pilipinas with basic data from the National Statistics Office
The country's traditional trading partners, Japan and the US, remain as the country's top export destinations, followed by Singapore, China, Hong Kong, Germany, Netherlands, Republic of Korea, Thailand and Taiwan in the top ten destinations.
Exports of services meanwhile grew by 150 percent from US$4 billion in 2004 to US$13.2 billion in 2010. Other business services, travel, and computer and information services account for 48 percent, 21 percent, and 16 percent, respectively, of total services exports.
Globally, the evolution in technology, prioritization of business strategies, migration, innovation and trends, environment-consciousness, and value for money have influenced the emergence of technology based sectors, strengthened hospitality services and increased the capability for borderless transactions. The Government has been vigilant in the growth of these industries, two of which are the BPOs and tourism.