Exports contract anew, 2015 goal likely missed

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Outbound shipments fall 1.1% in Nov

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Merchandise exports dropped for an eighth consecutive month in November 2015, contracting by 1.1 percent from a year earlier to $5.12 billion following significant declines for half of the 10 major commodities shipped abroad by the Philippines.

The result placed the year-to-date tally to $53.99 billion, down 5.8 percent from the comparable 2014 period. With the December figure still to be reported, Socioeconomic Planning Secretary Arsenio Balisacan on Tuesday said the full-year goal of $65 billion was likely missed.

“Meeting our export targets has been very challenging as the global economy remains weak, which translates into weak demand for the country’s export products,” he said.

In order to achieve the full-year target for 2015, Balisacan noted that merchandise exports should have grown by 129 percent last month to $11 billion.

While the National Economic and Development Authority (NEDA) expressed optimism that a recovery would be seen this year, it pointed out that risks to growth were skewed to the downside. The view was shared by a private analyst, who said exports would remain weak in the next six months.

November’s 1.1-percent decline compares to the 19.65-percent expansion, to $5.18 billion, recorded in the same month in 2014.

The Philippine Statistics Authority traced the drop to contractions in five of the top 10 goods shipped abroad, which offset gains made in electronic products—the country’s number one export item.

The five decliners were other apparel and clothing accessories (-42.7 percent), chemicals (-40.2 percent), woodcrafts and furniture (-9.5 percent), other manufactures (-6 percent) and metal components (-3.7 percent).

Electronic products, the top export with a 54.2 percent share of the total, increased by 9.3 percent to $2.54 billion. Semiconductors, in particular, grew by 5.7 percent to $1.96 billion.

A continued recovery in electronic product exports, the NEDA said, resulted in the milder 1.1-percent contraction in overall merchandise exports in November. The drop the previous month was 10.8 percent.

The other positive performers were machinery and transport equipments, (54.1 percent), electronic equipment and parts (19.7 percent), coconut oil (17.9 percent), and ignition wiring and other wiring sets used in vehicles, aircrafts and ships (13.3 percent).

Japan was the Philippines’ top export market in November, accounting for 21.3 percent of total outbound shipments or $1.09 billion. This, however, was down 1.8 percent from a year ago.

The United States came in second with a 14 percent share or $716 million. It was followed by Hong Kong, China and Taiwan.

Balisacan, who is the NEDA director general, noted that an improvement in Japan’s Purchasing Managers’ Index, which hit a 20-month high in November, signaled “solid growth in the Philippines’ top export market.”

“Both production and new orders increased at marked rates, with the former expanding at the fastest rate since March 2014,” he added.

The NEDA also pointed out that the Philippines posted the lowest export decline among monitored economies in East and Southeast Asia. Except for Vietnam, most economies in the region recorded lower merchandise exports in November.

“The country’s positive performance in sales of semiconductors bucked the international trend as worldwide sales were down in November 2015. Thus, the modest growth in exports of goods from the electronics and semiconductors segment is expected to continue propping up total merchandise exports,” Balisacan said.

For November, all key commodities registered double-digit declines except for manufactured goods, which posted a 3.6-percent year-on-year increase as shipments of electronic products continued to recover, it noted.

Export receipts from agro-based products fell by 23.1 percent to $240.6 million on account of lower revenues recorded mostly from fruits and vegetables as well as fish, unmanufactured tobacco and natural rubber, among others.

Outward shipments of mineral products decreased by 25.3 percent to $151.8 million in November because of lower earnings from copper and iron ore agglomerates. Petroleum and forest products also plunged, by 69.3 percent and 79.5 percent respectively.

“Although a slight uptick is anticipated in 2016 for exports, risks are skewed towards the downside . . . ,” Balisacan noted.

A more protracted slowdown across emerging economies could have substantial spillovers to other developing economies and eventually hold back recovery in advanced economies, he added.

Jeff Ng, economist at Standard Chartered Bank, said exports would continue to face challenges this year on the back of flat global economic growth.

“We still see some headwinds for export growth at least for the next six months,” he said.

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