Exceeding pre-pandemic levels, foreign trade expanded in 2021

MANILA, Philippines — Foreign trade regained much of its pre-pandemic vigor last year, even posting better figures than 2019 as import earnings hit the mark while export earnings fell below government targets.

Full-year data from the Philippine Statistics Authority reported on Thursday showed external trade in 2021 grew 24.1% year-on-year to a total of $192.4 billion. This was a  rebound from the contraction experienced in 2020, even outpacing trade earnings in 2019 of $182.5 billion.

Foreign trade grew 25.4% year-on-year to $17.7 billion in December.

Import earnings grew 31.1% year-on-year to $117.78 billion in 2021, inching up from the national government's target of 30% last year. In December, imports expanded 38.3% yearly.

On the other hand, exports slightly missed the government's goal of 16% as it only grew 14.5% year-on-year amounting to $74.64 billion for the entire 2021. Exports grew 7.1% year-on-year in December.

Sought for comment, Jun Neri, lead economist for Bank of the Philippine Islands, said a shortage in raw materials is to be blamed.

"Our exporters are in good shape but are having problems from short supply of raw materials. From a medium term perspective more has to be done to encourage our businessmen to venture in manufacturing including laws that will encourage foreign direct investment," he said in a Viber message.

With the import bill growing faster than export sales for the entire year, the country ended 2021 with a trade deficit of $43.16 billion, signficantly higher than the $24.6 billion recorded at the end of 2020.

"Vietnam is getting most of the China spillover from Covid including the billion dollar Lego plant because of energy and labor cost issues, inferior logistics infrastructure, among others," Neri added.

The current Omicron variant surge, taking hold nationwide and has been observed in other countries globally, could possibly affect foreign trade at the start of the year. But Michael Enriquez, chief investment officer at Sun Life Investment Management and Trust Corp, believes this would not be the case.

" I don’t think the recent surge will have a big effect on the trade numbers for this month as the government did not really tighten mobility," Enriquez said in a Viber message.