The COVID-19 pandemic and associated international travel restrictions disproportionately hurt services trade in 2020. Tourism arrivals slumped in 2020. Ongoing international travel restrictions point to another challenging year for services exports in 2021. Notably, Australia remains a key destination for Filipino students. Corporates, for instance, are seeking to up-skill and re-skill their workforce, including through remote learning. Beyond the pandemic, rising incomes should support recovery in demand for Australian tourism and education.
The COVID-19 pandemic disrupted bilateral trade in 2020. Total two-way goods and services trade between Australian and the Philippines fell to $5.2 billion in 2019-20 from $5.6 billion in 2018-19. Goods exports to the Philippines totalled $2.1 billion in 2019-20, consisting mostly of precious metals and ores, copper, wheat and beef. As the Philippines emerges from COVID-19, this provides opportunities to Australian exporters of personal protective equipment and vaccines, copper mining, electric vehicles, agriculture, construction, defence technology projects, education and renewable energy. Australian merchandise imports from the Philippines amounted to $623 million and consisted mainly of electrical machinery and parts and computers.
More than 300 Australian companies operate in the Philippines, employing over 44,000 Filipinos in business process outsourcing, infrastructure, financial services, ICT and energy sectors. Australia and the Philippines are both members of APEC, and Australia is an active participant in the East Asia Summit (EAS). Australia and the Philippines are among the 15 countries that signed the Regional Comprehensive Partnership Agreement (RCEP) on 15 November 2020, which will help strengthen economic integration and build strategic confidence in the region.
The pandemic hurt bilateral investment flows in 2020. Prior to the pandemic, Australia’s investment in the Philippines held broadly consistent between $9 billion to $10 billion over the five years to 2019, but fell to $7.2 billion in 2020. Australia’s proximity and its reputation as a supplier of quality products, technology and services are important factors in supporting trade and investment between the two countries.