PHILIPPINE exports sustained a fall for the fourth consecutive month in July, with the drop accelerating slightly to 1.82 percent year-on-year in value terms from 1.79-percent in June as major commodities posted double-digit declines, the Philippine Statistics Authority (PSA) said on Thursday.
The latest drop reverses the 11.66 percent year-on-year increase posted in July 2014.
The National Economic and Development Authority (NEDA) warned that easing commodity prices worldwide could dampen export revenue prospects for the near term, with the outlook for semiconductors in particular remaining weak.
Drop in 8 commodity groups
Exports in July fell to $5.327 billion from $5.425 billion a year earlier.
July was marked by declines in eight major commodities namely: other mineral products (-66.6 percent); machinery and transport equipment (-55.2 percent); articles of apparel and clothing accessories (-37.3 percent); metal components (-29.1 percent); chemicals (-26 percent); coconut oil (-14.7 percent) ignition wiring set and other wiring sets used in vehicles, aircraft and ships (-7.4 percent) and other manufactures (-4.6 percent).
The 34.6 percent surge in electronic products exports, which remained the country’s top export items with value reaching $2.818 billion, failed to make up for the fall in the eight major commodity groups.
For the first seven months of 2015, cumulative exports declined 4.1 percent to a total of $34.214 billion from $35.659 billion in the year-earlier period.
Japan was the Philippines’ top export market in July, accounting for 19.3 percent of the country’s total outbound shipment, or $1.031 billion. However, the value of exports to Japan reflects a 14.6 percent plunge from the year-ago level.
China came in second, with a 16.3 percent share, or $867 million. It was followed by the United States, Hong Kong and Singapore.
Easing commodity prices
“Exports of semiconductors are expected to slow down in the fourth quarter of the year, owing to weak orders from the EU, China and Japan,” Economic Planning Secretary and NEDA Director General Arsenio Balisacan said in a statement.
Semiconductors had the biggest share of 42.2 percent of the exported electronic products in July, and grew by 55.0 percent to $2.247 billion from $1.450 billion in July 2014.
Balisacan said policies geared toward boosting domestic demand are essential to counter external weaknesses and ensure that the country’s growth trajectory remains on track.
A drag on GDP growth
Analysts from Singaporean bank DBS see the fall in merchandise exports in July having a negative impact on Philippine growth, which they said may yet be offset by the still robust services sector and sustained economy activity in the country.
The “impact from weak exports of goods is clearly negative on GDP growth,” DBS analysts said in a research note.
Despite this, they said exports of services remain strong, anchored by sustained growth in the business process outsourcing (BPO) industry.
“More importantly, domestic demand is still robust for now. Private consumption is still growing circa 6 percent while total investment growth is likely to come in around 8 percent this year. Capacity utilization remains high at over 80 percent,” they said.
“There is no strong reason to be too concerned about GDP growth momentum for now,” the note from the DBS analysts added.