Demand for Philippine products in the world market continued to drop for the 14th consecutive months in May, prompting the government’s economic planning body to call for refocusing export strategies.
Total exports in the first five months of this year ($22.07 billion) were down by $1.56 billion (6.6 percent) from its year-ago level. In May alone, exports declined 3.8 percent, or $180 million, from previous May to $4.71 billion.
Besides, the decline the manufacturing sector is currently experiencing suggests orders for the months ahead are also down. According to the National Economic and Development Authority (NEDA) the growth of exports is expected to remain muted for the rest of 2016 with the slow recovery of the global economy.
Data the Philippine Statistics Authority (PSA) released Tuesday showed that half of the 10 major commodity groups accounted largely for the decline. They are various mineral products (-43.8 percent), apparel and clothing accessories (-41.7 percent), chemicals (-37.2 percent), metal components (-14 percent), and electronic products (-4 percent).
Shipment of electronic products, the country’s biggest export item, also suffered decline. It lost $90 million worth of market. However it continued to rank as the top export, accounting for 48 percent of total shipments. Semiconductors also decreased by 11.8 percent to $1.57 billion from $1.78 billion.
While an analyst said exports in May were in line with the weak Asian performance, NEDA said the situation prompts a need to refocus export strategies of firms. In that, the focus on domestic market will increase. It is important, NEDA said, to increase the flexibility of export firms to cater to the domestic market, given robust domestic demand.
“We also need to keep government spending on track to ensure that domestic demand continues to provide a cushion to mitigate the impact of the country’s weak exports growth,” said Socioeconomic Planning Secretary Ernesto Pernia.
“Given the soft demand, export-oriented firms may need to refocus their strategies to consider non-traditional markets, which have shown healthier appetites in recent months,” Pernia, who is also the NEDA director general, said.
He cited for instance the growth of exports to European countries. Exports to France and Switzerland grew by 37.8 percent and 72.0 percent, respectively, for the first five months.
On the other hand, exports to traditional markets such as Germany and the Netherlands declined by 18.8 percent and 10.6 percent, respectively.
Sharing the same view, ING Bank Manila senior economist Joey Cuyegkeng said May exports continued to be in line with the weak Asian performance. “Exports of other Asian economies for May continued to show year-on-year contraction,” he said.
Japan was the top market, accounting for 22.1 percent of outbound shipments worth $1.04 billion, increasing 1.5 percent from $1.02 billion a year ago.
The United States came in second with a 14.9 percent share or $703.54 million. It was followed by Hong Kong, China and Singapore.