PHILIPPINE merchandise exports are likely to grow at a moderate pace of 3 percent this year from 9 percent in 2014, Singapore-based DBS Bank said.
“Total export growth is set to normalize this year to about 3 percent, hardly surprising given the robust, near double-digit, average growth over the past three years,” DBS said in a research report published on Friday.
Given the state of the global economy, merchandise exports are meant to normalize this year as it is hard for the sector to grow by double digits in four straight years.
Philippines shipments in the first four months of 2015 totaled $18.623 billion, down 1.2 percent from $18.840 billion on-year.
Such a scenario has little impact on DBS’ 6 percent outlook for the
Philippine gross domestic product (GDP) this year because of a resilient consumption and a robust investment while the manufacturing sector gives an encouraging performance.
The bank said both private consumption and investment have contributed an average of 6 percent to GDP growth over the past three years.
“Going by the first quarter of 2015 data, we are likely to see this trend to be sustained for this year. Indeed, investment growth has outperformed our expectations in the first quarter and another doubledigit investment growth this year is not to be ruled out,” it said.
More importantly, the DBS continues to see encouraging signs in manufacturing as productivity has increased tremendously in recent years.
Total foreign direct investment reached a record high of 2.2 percent of GDP last year, of which 60 percent went into the manufacturing sector, it said.
The bank pointed out that the revitalization of the manufacturing sector has been one of the key positives for the Philippines in the past couple of years.
This development is a relief for the services and construction sectors, the bank added.
“The government’s 7 percent GDP growth target was always a long stretch to begin with. Going by our forecast of 6 percent GDP growth this year, the Philippines still remain as one of the fastest growing economies in the region. The policymakers are likely to still be comfortable with this,” the bank added.