Demand for Philippine products in the world market, which marked growth in February and March, slipped in April with shipments declining 4.1 percent to $4.254 billion. As a result, total shipments during the first four months of the year declined by $1.375 billion or 7.3 percent to $17.363 billion compared with the first four months of 2015.
Total exports had risen to $4.622 billion in March from $4.310 billion February and $4.197 billion in January.
At the same time, manufacturing trend suggests that domestic consumption has expanded at a relatively faster pace in April, suggesting economic growth despite weak exports.
A clear indicator of this is the double-digit growth seen in factory output—both in volume and value. Production in April grew 10.5 percent, faster than the revised 8.9-percent growth in March and the 1.8 percent growth a year earlier.
Some of the energy for higher domestic consumption came from accelerated government spending as well as election spending. Considering the latter temporary factor, the high growth rate of April can be expected to moderate in coming months, according to observers.
A key factor that is hurting exports is the fragile global economy. In a statement, the National Economic and Development Authority (NEDA) said the country’s export performance remains subdued by external conditions. “The slow pace of global economic recovery has negatively affected trade in most countries. Given this situation, the country’s export sector will continue to remain sluggish in the coming months,” said Socioeconomic Planning Secretary Emmanuel Esguerra.
The data the Philippine Statistics Authority (PSA) released Friday showed that electronics, which account for 53.1 percent of the country’s total exports, moved against the downtrend and registered 1.9 percent growth, rising to $2.258 billion from $2.216 billion in April 2015.
The export item that suffered the most was apparel and clothing accessories. It fell 39.1 percent. Among others, export of chemicals declined by nine percent, semiconductors lost 2.6 percent, and machinery and transport equipment fell 0.9 percent.
Agro-based, mineral, forest, and petroleum products also suffered revenue decline, as orders from some of the country’s major trading partners such as the United States and China reduced and tempered gains in other markets such as Singapore and Japan.
Looking at month-on-month comparison of export figures, Standard Chartered Bank economist, Jeff Ng, noted April exports have, in fact, recovered somewhat from the 15.1 percent year-on-year drop in March. “This was helped a bit by favorable base effects but, nonetheless, still represented a 13th consecutive month of decrease,” he said.
To overcome the downward trend, Esguerra, who is also the NEDA director general, reiterated his call for a renewed strategy for improving export products and diversifying towards non-traditional export markets that have high demand.
“The government should enhance its support for emerging export products to maximize any opportunity to sell Philippine-made merchandise. The quality should also be continuously upgraded to deepen access to existing markets and diversify into new ones,” he said.
On the production front, the value of production index (VaPI) gained 6.8 percent from the revised growth of 1.8 percent in March, and reversed the 6.4-percent decline in April 2015, mainly helped by 13 of the 20 major industries. Among them, six sectors recorded double-digit growth. They are machinery except electrical (43.9 percent), miscellaneous manufactures (40.7 percent), printing (33.5 percent), food manufacturing (27.1 percent), transport equipment (23.5 percent) and basic metals (18.8 percent). Others that reported notable growth are: miscellaneous manufactures (49.7 percent), printing (32.3 percent), food manufacturing (28.4 percent), transport equipment (23.9 percent),machinery except electrical (18.7 percent) and beverages (11.9 percent).
According to Esguerra, stable inflation and interest rates, and sustained foreign investment flows will further support the favorable outlook for the manufacturing sector.
But, he added, “risks to production growth are anticipated with the possible occurrence of La Niña by the end of the year and the potential recovery of oil prices.”