Philippines winning diverted US-China trade: Analysts

Cargo at the Manila International Container Terminal in 2012.
SEPTEMBER 12, 2019 - 10:22 AM

MANILA has gained from the trade war between the United States and China, based on a review of export data from the first seven months of 2019 by Maybank Kim Eng analysts.

Amid global trade tensions, the Philippines’ shipments to the US and China together rose by 9.2 per cent year on year in the January-to-July period, against 10.7 per cent the year before.

The Philippines supplied 3.9 per cent more goods to the US in trade categories that have been hit by tariffs on Chinese products - largely manufacturing-related items.

Meanwhile, China bought 1.3 per cent more goods from the Philippines for items subject to tariffs on US imports - despite an overall decline in Chinese imports from the Philippines.

As global trade tensions single out the technology sector for attention, electronics exports from the Philippines to both markets rose. Shipments of automatic data-processing machines parts to the US nearly doubled year on year, while similar shipments to China were up by 69.7 per cent.

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Manila is also supplying more tariffed consumer goods like plastic furniture - where exports to the US grew by 74.8 per cent - and farm products, such as bananas and pineapples, to China.

Still, the Philippines is not necessarily out of the woods, with the Maybank Kim Eng economists noting that purchasing managers’ sentiment dimmed in August on the back of softer new orders. 

“Manufacturers were less optimistic about future output as only 57 per cent expect higher output next 12 months, the second lowest print on record,” they wrote.

Indeed, the year-on-year export growth of 0.1 per cent from January to July points to “a relatively more benign impact from the US-China trade tension (against) Asian neighbors, but also the low base in 2018”, Citi analyst Nalin Chutchotitham said in a separate report.