Export dive bottoming out; dramatic recovery unlikely

BUFFETED by a global economy in recession, Philippine exports retreated to their lowest ebb of two-digit below zero growth in the first nine-straight months of 2009.

An indication that a recovery is close to happening came in October, when at revenues of $3.66 billion, the decline has eased to negative 8.3 percent compared with the same month the previous year. There was also a slight growth compared with exports the previous month.

If the October figures were an indication the worst is over for the segment of the domestic economy hobbled by the global economic crisis, projections then point to an eventual recovery.

The overall picture for next year does not, however, promise a dramatic improvement.  By year-end, the dollar income losses from merchandise sales are seen to top the $13-billion mark, the biggest retreat in foreign sales of Philippine goods since statisticians started tracking down export performance.

The ebb and flow of the country’s international trade over the past 10 years had shown that whenever bad times hit the export sector, the battering was quick and hard. That happened in 2001, when a global trade slump pulled down exports by 16 percent.

From a hefty $38 billion in sales the previous year capping the peak of a yearly winning streak of double-digit growth rate since 1993, sales in 2001 nosedived to $32 billion, representing earning losses of $6 billion.

It took the exporters three painful years to earn back what was lost in just one year and returned to the precrisis peak to $39.5 billion in dollar earnings only by the end of 2004. Real growth came again in 2005 but this time around, the two-digit rate attained during the ’90s has turned elusive.

The rate of export growth inched up to again peak at $50.46 billion in 2007 but the following year, a seemingly domestic problem of the financial system in the United States turned out to be a global economic tsunami that hit Philippine shores, particularly the exporters, by the last quarter of last year.

The bull run of growth suddenly stopped which saw the beginnings of a sudden export winter, a winter which is now only beginning to thaw.

Given that historical track record of sudden decline and painful, three-year, recovery in the past, coupled with the fact that the value of foregone exports has more than doubled in just one year, the quick and high rate of rebound trade officials are gunning for, looks unlikely.

Major export products have not changed much in the past 10 years.  The biggest ticket industry, electronics and semiconductor, is highly dependent on how fast the country’s top export destinations, namely, the United States, Japan, Europe and China, recover their taste for buying new, high-tech electronics gadgets and equipment.

This will depend much on how fast their industries get over the recession rut.

The October export figures gave a surprise flash of hope in the export of ignition wiring sets for all types of motor vehicles from airplanes to cars at a hefty growth of 30.3 percent. It had shown signs that globally, the transportation industry is one of the first to bounce back. Which, in turn, signals that the flow of goods and people within nations and across economies is again on the rise.

The growth in banana exports and the resiliency of Philippine woodcraft and furniture also give some hope that indigenous exports, those that use local materials like food and natural-resource -based products, have better chances of faster recovery than those that rely on imported raw materials like the garments industry.

Food, furniture, handicrafts and other “green shoot” products will have to shake off domestic baggage like unsteady supply of raw materials, the impact of climate change and sluggish growth in farm and fishery productivity—to sustain a high growth path over the long haul. –Philexport News and Features