Margie Markland

The Philippines' export sector could face risks as concerns mount over a possible economic slowdown in the United States (US), according to the National Economic and Development Authority (NEDA).

Photo Courtesy of NEDA.

Worries of a potential US recession heightened after July 2024 unemployment data showed an increase to its highest level in the past three years.

In a press briefing on August 24, NEDA Secretary Arsenio Balisacan warned that, while uncertain, a potential slowdown could affect the country.

“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,” Balisacan said.

He added that the slowdown could have indirect effects on various channels such as exchange rates and interest rates.

Preliminary data from the Philippine Statistics Authority showed the US was the largest destination of Philippine exports in June 2024, with a 16% share amounting to $897.80 million.

In the first semester, Philippine exports to the US totaled $5.82 billion.

At present, electronic products are the country’s top exports.

Balisacan said the government’s thrust is to work on diversifying the country’s economic growth sources to mitigate external shocks.

“We need to ensure that the economy is diversified enough to withstand any major shocks,” he said.

He also noted that a more diversified economy could help the country rebound more quickly from weather-related disruptions, which can adversely affect agricultural production and inflation.

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.

“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 added.

Earlier, Semiconductor and Electronics Industries in the Philippines Foundation Inc. president Dan Lachica said the group is projecting a 10% contraction in electronics exports this year due to soft demand.

Exports of Philippine electronic products increased by 5.2% to $20.63 billion in the first half, up from $19.61 billion in the same period last year.

Total Philippine merchandise exports rose by 3% to $36.41 billion from January to June compared to last year’s $35.34 billion.