MANILA, Philippines — The Philippines’ electronics sector stands to benefit from increasing global demand for tech goods amid COVID-19 lockdowns worldwide, hence would help ease the domestic recession inflicted by the pandemic, the Washington-based Institute of International Finance (IIF) said.
“Restrictions on people’s daily activities led to significant behavioral changes, which exacerbated pre-existing trends towards remote work and online learning. Such developments stimulated demand for electronic applications, computing devices, and other technology-related products,” IIF said in a July 29 report titled “EM Asia: COVID-Induced External Adjustment.”
This bigger demand for high-tech gadgets already jacked up first-half exports of computer and component parts in South Korea and Vietnam by 81 percent year-on-year and 25 percent, respectively, IIF noted.
“Looking ahead, an increase in high-tech device export orders, albeit at a more moderate pace compared to the first half, will help to partially offset the negative impact of the global recession in several countries—including in Malaysia, the Philippines, South Korea, and Vietnam, where they make up a substantial share of total exports,” IIF said.
In the case of the Philippines, the latest preliminary government data showed that in May, electronic products had the largest contribution among export commodities at $2.29 billion, or 57.4 percent of the total.
However, electronics exports last May declined 33.4 percent from $3.44 billion during the same month last year as the COVID-19 lockdown since mid-March restricted movement of non-essential goods despite allowing exporters to continue partial operations during the quarantine.
In general, IIF said “manufacturing was essentially brought to a halt” in countries like the Philippines, “which imposed the world’s strictest lockdown.”
“While exports suffered, the sharp drop in domestic demand resulted in a steep decline in imports as well—with lower-income expectations holding back consumption and lockdowns depressing retail spending,” IIF added.
In the Philippines, goods imports slid by a faster 40.6 percent year-on-year in May, compared with the 35.6-percent drop in merchandise exports during the same month, the latest data showed.