CRITICAL

ANALYSIS
“Import & Export”
Economic Development
Effects
The Philippine Statistics Authority says both imports and exports shrank in December
2018. Overall, the country's trade gap is now at its widest in history. The government
said a weak peso would lift exports. It did not. The government said it is aggressively
pushing infrastructure projects and could lift imports. It did not. Some of the
government's economic assumptions seemed to have been shaken up in December
2018, with exports posting only $4.7 billion or a negative growth rate of -12.3% year-on-
year, said the Philippine Statistics Authority (PSA) on Tuesday, February 12. This is the
slowest export growth since March 2016. Meanwhile, imports were also in the red,
posting only $8.5 billion or a growth rate of -9.4% in December 2018 compared to the
same month in 2017. The negative import growth is the slowest since April 2012. The
last time both imports and exports shrunk at the same time was in February 2016.
On the other hand, imports climbed to $108.9 billion, 13.4% higher year-on-year. The
overall figures brought the trade gap to a whopping $41.4 billion, the widest ever in
Philippine history, according to National Statistician Lisa Grace Bersales. Weak exports
- Bringing the country's locally-produced goods to other countries boosts the economy.
A weak peso theoretically entices other countries to buy Philippine goods, as they may
buy them at a cheaper cost. However, this did not happen despite the peso trading
against the United States dollar at P52 to P54 levels last year.
"Despite the continued weakening of the peso, export performance has not gained the
so-called competitive edge that we had hoped it would derive from a weaker currency,"
said Nicholas Mapa, senior economist of think tank ING.
The country's exports are driven mainly by electronics, which saw a slump last
December. Mapa said the trade war between China and the US will hurt the sector even
more. "Exports are seen to remain lackluster given the dependence on the electronics
sector to carry the entire export base, all the more given the external environment and
the US-China trade war," Mapa said. Weak imports - The government's ambitious
infrastructure push would mean more imports of steel and raw materials. While imports
increased overall in 2018, it saw a dip in December. The pullback was observed in
capital goods and raw materials.
Higher interest rates stifle demand for investment. Trade gap - When imports exceed a
country's exports, a trade deficit or gap occurs. A wide trade gap weakens the country's
currency, affects interest rates, and may result in fewer jobs.
One sector of the economy frequently examined in analyzing the impact of trade
liberalization in a country is the labor market. Specific attention is often given to
employment and wage effects as these have important welfare implications.

Relationship
Hypothesis : 1. There is no significant relationship between imports to employment.
2. There is no significant relationship between exports to employment.
Conclusion : 1. There is significant relationship between imports to employment.
2. There js significant relationship between exports to employment.

At the aggregate level, results of the analysis showed that labor demand increases with
higher propensity to export and import. At the manufacturing sub-industry level, greater
export propensity has a positive impact on labor demand while import propensity has an
insignificant impact on labor demand. In addition, increases in export propensity
increase the proportion of low-skilled production workers employed both at the
aggregate and manufacturing sub-industry levels. Expansion in exports has increased
the demand for workers in the Philippines with basic skills.

Relevance
Exports generally create jobs at home; imports generally create jobs abroad. Exports
and imports tend to move up and down together, through causation not just
coincidence; so, the net impact on jobs either way is minimal. Furthermore, whether we
have a small net gain or net loss as a result of international trade is not only hard to
anticipate in advance, it’s even hard to determine after the fact. Even so, the net gain or
net loss will be small, however move up and down together.