THE PHILIPPINES must diversify its sources of growth to remain resilient in the face of a looming recession in the US, the National Economic and Development Authority (NEDA) said.
“No country will be spared from a hiccup that comes from the biggest economy in the world,” NEDA Secretary Arsenio M. Balisacan said at a briefing last week.
“We need to ensure that (sources of growth) can be diversified enough to be able to withstand any major shocks.”
Weak US employment data in July heightened worries of a potential US recession.
Exports would be most affected in the event the US economy stalls out, Mr. Balisacan said.
In June, the value of exports dropped 17.3% year on year to $5.57 billion, the lowest value in 13 months.
In particular, Mr. Balisacan said the electronics and semiconductor industry should “move to higher levels” of production.
The Philippine semiconductor industry currently focuses on the assembly, testing, and packaging of electronic goods.
Exports of electronic goods, which accounted for 53.7% of total exports, fell 24.4% to $2.99 billion in June.
Semiconductor exports dropped 29.5% to $2.32 billion in June, according to the Philippine Statistics Authority.
Mr. Balisacan cited the potential of the food processing industry in diversifying exports.
The information technology-business process outsourcing sector could also help increase the value-added potential of the manufacturing industry, he added.
Exports of manufactured goods fell 21.1% to $4.34 billion in June, accounting for 78% of the total.
RECESSION IMPACTS
The sputtering US economy may also weaken remittances and foreign direct investment, Union Bank of the Philippines, Inc., Chief Economist Ruben Carlo O. Asuncion said.
“In general, a US economic decline can affect overall investor and consumer confidence. This can create uncertainty impacting not just the Philippines, but the whole world,” he said via Viber.
“However, it is fitting to note that the extent of the impact will depend on various factors, and there are many moving parts,” Mr. Asuncion added. “This includes, as earlier alluded to, the level and severity of the US downturn.” — Beatriz Marie D. Cruz
