Philippine exports continued to post double-digit growth in July from a year earlier but lost significant momentum from June, the latest official data shows.
Total export earnings in July rose 12.4 percent to $5.461 billion from $4.859 billion in the same month last year, according to data released on Wednesday by the National Economic and Development Authority (NEDA) and the Philippine Statistics Authority (PSA).
Growth in July, however, slowed sharply from the 21.3 percent year-on-year increase recorded in June.
Total merchandise exports in the seven months to July grew 8.5 percent to $35.129 billion from $32.374 billion.
NEDA said the Philippines still achieved the second-highest export growth among the major economies in East and Southeast Asia in July, trailing only China, whose exports expanded by 14.5 percent during the month, and slightly ahead of Vietnam’s 12.2 percent export growth.
The PSA traced growth in exports to the increased earnings of nine major commodities, specifically machinery and transport equipment; other mineral products; ignition wiring sets and other wiring sets used in vehicles, aircrafts and ships; articles of apparel and clothing accessories; coconut oil; woodcrafts and furniture; other manufactures; and electronic products.
Electronic products remained the country’s top export, with total receipts of $2.090 billion, accounting for 38.3 percent of the total exports revenue in July and higher by 2.7 percent than a year earlier.
Machinery and transport equipment ranked second with value posted at $635.10 million. It was followed by “other manufactures” with export revenue of $365.25 million, other mineral products with earnings amounting to $347.64 million, and woodcrafts and furniture with revenue valued at $279.10 million.
NEDA said the favorable performance of the manufacturing sector largely reflected upbeat global manufacturing activity.
Japan was once again the country’s top destination for exports with revenue amounting to $1.212 billion, comprising a 22.2 percent share of total exports for July, an increase of 24.4 percent from the same month a year ago.
United States ranked second with export receipts valued at $801.60 million. Other top markets for Philippine exports were China, Hong Kong and Singapore.
Economist Rahul Bajoria at UK-based investment bank Barclays, however, credits shipments to the US as the key driver behind the brisk export activity in July.
He acknowledged that exports to Hong Kong and Japan were also gaining momentum, suggesting the diverse nature of electronics demand.
In terms of commodities, Bajoria pointed out that the breakdown by product shows that electronic exports remain elevated on level terms, and demand for clothing and agriculture products also picked up at the margin.
“Today’s export data reiterates the sustained strength of the growth momentum, which we forecast at 6.5 percent in 2014,” he stated.
Improving global economy
Socioeconomic Planning Secretary and NEDA director-general Arsenio Balisacan said the country’s robust exports growth reflects global trends, as major economies such as the USA, China and Germany showed signs of bouncing back from economic shocks.
“This suggests that global demand is picking up pace and that our exports sector is slowly gaining momentum,” Balisacan said.
He added that overall, global trade activity for the initial month of the third quarter projects better prospects for the coming months of the year especially for our electronics, garments, intermediate goods exports, and agriculture-based products.
Warning about power supply
Despite this, Balisacan stressed the importance of addressing the instability of power supply in the country.
“The expected tightness in the supply of power in the coming months could disrupt industrial production, hurting exports.
Additional cost of utilities may also hamper production volumes.
This should also be given priority by the government to support the country’s export targets,” he concluded.