Contraction gains pace to -4.5% in Feb from -3.9% in Jan
PHILIPPINE merchandise exports fell for the 11th consecutive month in February, pulled down by declines in five of the 10 major commodity groups, data from the Philippine Statistics Authority (PSA) showed on Tuesday.
The National Economic and Development Authority (NEDA) said that the global economic slowdown continued to strain Philippine merchandise exports. An economist said despite the sharper decline in February there are some signs that the rate of fall may be stabilizing.
February exports declined by 4.5 percent to $4.310 billion in February compared with $4.513 billion a year earlier. In January, exports dropped only a 3.9 percent.
Year-to-date, exports for the first two months of 2016 fell by 4.2 percent to $8.498 billion from $8.870 billion during the same period in 2015.
The five major exports that posted declines were apparel and clothing accessories at 44.9 percent, chemicals (38.5 percent), other manufactures (15.5 percent), metal components (13.3 percent), and coconut oil (5.1 percent).
On a positive note, electronic products, the country’s biggest export with a 49.4-percent share of the total, increased 8.1 percent to $2.131 billion from $1.971 billion for the same period a year earlier, while semiconductors also rose 12.3 percent to $1.496 billion from $1.333 billion.
Japan was the Philippines’ top market in February, accounting for 21.8 percent of outbound shipments worth $939.61 million. This was, however, down 0.3 percent from $942.32 million a year ago.
The United States came in second with a 17.2 percent share or $743.04 million. It was followed by Hong Kong, China and Singapore.
Weak global demand
In a statement on Tuesday, NEDA said export performance in most of the trade-oriented economies in East and Southeast Asia continues to reel from weak global demand, a consequence of the global economic slowdown.
“For the Philippines, we see this continuing only within the near term, but it remains important for us to set up short-term measures that will support some of our export products,” said Socioeconomic Planning Secretary Emmanuel Esguerra.
The agency said only Vietnam and Thailand posted positive export gains while China recorded the steepest decline at 25.3 percent during the period.
Esguerra, who is also NEDA director general, said as softer external demand is expected over the near term, the Philippines should at least aim for a 5.4 percent growth in merchandise exports, which is the low-end projection of the Export Development Council.
“Short-term measures may include providing government support to export products for which demand is growing faster relative to other export segments, and where the Philippines has an increasing market share,” he said.
For Jeff Ng, economist at Standard Chartered Bank, while February exports were a negative print, indications are that the decrease in outbound shipments is stabilizing.
“Electronics exports are a bright spot. With the US semiconductor book-to-bill ratio above 1, it means that electronics exports could be supported,” he said.
Focusing on the drop, Ng explained that there might also be some price effects on other products that affected the growth of exports.
Looking ahead, the economist said that while he sees export weakness continuing, gross domestic product (GDP) growth would still remain strong in the first quarter of the year.
“We currently expect GDP growth of 5.7 percent this year, with the first-quarter one of the stronger performing quarters for the year,” he added.
NEDA said revenues from manufactured products slightly dropped by 2 percent to settle at $3.7 billion from $3.8 billion in February 2015, reflecting the general slowdown experienced by the manufacturing sector around the world.
“But it is worth noting that overseas sales of our electronic products posted a ninth consecutive month of positive growth,” said Esguerra.
Meanwhile, total sales receipts from agro-based products fell by 5.8 percent to $307.9 million in February 2016, due to lower sales in coconut products and other agro-based products.
Also, outbound sales of mineral products declined by 32.5 percent to $172.6 million in February 2016 due to lower exports of all segments except for copper concentrates.
Outward shipments for petroleum products likewise declined by 60.5 percent to $6.1 million in February 2016 due to persistent low global oil prices.
NEDA pointed out that while current global growth conditions remain tilted to the downside and will continue to affect exports in the short term, the Philippines must take advantage of the opportunity presented by an expected improvement in the economic growth of the Association of Southeast Asian Nations (Asean) region.
Esguerra said that GDP growth in India and the Asean region are expected to pick up, which will help balance the slowdown of China.
In particular, he said, the ramping-up of investments in Indonesia and the Philippines,
Vietnam’s continued expansion, and Thailand’s recovery from a slump in 2014 will prop up growth in Asean to 4.5 percent, higher than the 4.4 percent growth estimated in 2015.
“This provides an opportunity for the Philippines to expand its export market in the region. And it is important to ensure that Philippine products conform to export standards so as not to lose market share,” he concluded.