MANILA -- While fondly anticipated by some and feared by most, "Brexit" is unlikely to register as anything but a faint blip on the Philippines' trade outlook, an economist says less than a year before the United Kingdom (UK) bids the European Union (EU) farewell.
IHS Markit Chief Economist for Asia Pacific Rajiv Biswas said Thursday that the Philippines, along with other Asian nations, have lessened their trade dependence on EU markets over the years.
Its growing trade with Asian countries has also prepared the Philippines for any foreseeable negative impact of Brexit.
Early this week, British Prime Minister Theresa May announced that the UK targets to be officially out of the EU by March 29, 2019.
“The importance of the UK as an individual export market for Asian countries has declined significantly over the past 20 years. Fast-growing Asian markets, notably China, have become increasingly important export markets for many Asian nations, while the significance of EU trade partners has declined relatively,” Biswas told the Philippine News Agency (PNA) in an e-mail.
“Eight of the top 10 trade partners of the Philippines are Asian countries, with the US and Germany being the only two non-Asian countries among the top 10 trade partners of the Philippines,” Biswas added.
He noted that with the declining importance of UK as an export market for Asia, the region is not exposed directly to the effect of any sharp slowdown in UK imports following the Brexit.
For the Philippines alone, the country’s exports to UK account less than 1 percent of its total export revenues.
Data from the Philippine Statistics Authority likewise showed that exports to UK and Northern Ireland in 2017 declined by 5.4 percent to USD473.94 million from 501.06 million in 2016. The combined markets were also the top 20th destination for Philippine exports last year.
“The UK is not even in the top 10 global export markets for the Philippines. Germany, Netherlands, and France are the top three EU export markets for the Philippines exports,” Biswas reiterated.
“Therefore, Brexit is unlikely to have any significant impact on the overall Philippine trade outlook,” the economist added.
He, however, mentioned that the uncertainty in UK-EU relations in a post-Brexit Europe does cast a cloud for Philippine-based companies operating in the UK.
“An important uncertainty will be whether UK trade with the EU will remain free of tariffs after Brexit, or whether any tariffs on EUK-EU trade will be applied,” Biswas explained.
He mentioned that many firms are repositioning their operations within the rest of the EU, preparing for a potential “Hard Brexit”, where the UK exits the bloc without any deal in place for its future relationship with the EU.
In a text message to PNA, Trade Secretary Ramon Lopez said that his department is studying the possible impact of Brexit to the country’s trade.
About 6,274 Philippine goods can enter the EU market, including UK, duty-free due to EU Generalized Scheme of Preferences Plus (GSP+).
But he noted that Philippine exports entering UK under the GSP+ is “not huge”. (PNA)