PHILIPPINE exports dropped for the third straight month in February on the back of lower shipments of agro-based products, manufactures, and mineral products, the government reported on Wednesday.
Data from the Philippine Statistics Authority (PSA) shows that February exports fell 3.1 percent to $4.512 billion from $4.675 billion a year earlier, brought about by slower exports of the country’s six major commodities.
These six major commodities are woodcrafts and furniture; other mineral products; metal components; electronic equipment and parts; other manufactures; and machinery and transport equipment.
The deceleration in February exports follows the 0.5 percent year-on-year drop posted in January and the 3.2 percent decline recorded in December 2014.
The National Economic and Development Authority (NEDA) said the decline during the month mirrored the export performance of other Asian economies.
In a statement, the NEDA said most of the major economies in East and Southeast Asia also registered negative export performance in February, with only China reporting export growth.
‘Fragile global economy’
“This partly mirrors the still fragile global economy, which is particularly reflected in the country’s weak turnout of merchandise exports on the back of lower demand from the country’s major trade partners, Japan and China,” said Socioeconomic Planning Secretary Arsenio Balisacan.
Balisacan, who is also NEDA director general, stressed that a contraction in exports of agro-based products and manufactures, particularly in shipments to Japan and China, was a major factor for the sluggish performance in February.
The NEDA noted that during the period, total export revenues from agro-based products contracted by 20.1 percent to $327 million in February from $409.4 million in the same month last year.
This, in turn, was due to lower earnings from fruits and vegetables, sugar products, and other agro-based products.
In January this year, export earnings from agro-based products had risen to $313.9 million from $278.2 million a year earlier on higher shipments of sugar, coconut products and other commodities in this segment.
Export revenues from manufactured goods also declined by 1.8 percent to $3.8 billion in February from $3.9 billion a year earlier, due to lower receipts from wood manufactures, machinery and transport equipment, and other manufactures.
“The recorded contractions in these manufactured commodities slightly outweighed the year-on-year gains in the value of electronic products, most notably of semiconductors, garments, and chemicals,” Balisacan said.
Similarly, the agency said that lower export volume and the plummeting global prices of crude oil continue to drag revenues from petroleum products, which contracted by 51.5 percent during the period.
Mineral products, meanwhile, posted a 7.1 percent increase in outward sales due to higher shipments of copper metal, gold, and iron ore agglomerates, On the other hand, electronics remained the country’s top export product in February, accounting for 43.7 percent of total exports for the month, with export earnings rising 4.8 percent to $1.97 billion from $1.88 billion in February 2014.
Slowdown to persist
The NEDA stressed that exports may continue to slow down in March given the continued decline in global commodity prices.
“While this strain and moderation in Philippine exports is expected and was noted last month, now is the high time to be vigilant,” said Balisacan.
He noted that forward estimates of manufacturing activity for both Japan and China suggest another slowdown in March.
“Global commodity prices also continue to decline, potentially reducing revenues from agro-based and mineral exports in the succeeding period,” he added.
In this regard, Balisacan stressed the need to monitor potential external shocks that can negatively affect the country’s trade performance.
The government will also benefit from intensifying its efforts in expanding its market base for agro-based products, he added.
“Further improvements in infrastructure and logistics should also continue to support the export manufacturing sector. Likewise, concerns on the stability of power supply should be addressed,” he said
Export growth to recover
UK-based investment bank Barclays takes a different view, however, as it expects exports to normalize in March with the absence of supply disruptions.
“We had expected a more substantial normalization following a disruption due to the additional public holidays in January related to the Pope’s visit, as well as the easing of congestion at the Manila Port,” Bill Diviney, economist at Barclays said.
“Overall, we expect export growth to recover further in March following the easing of congestion at the Manila Port, though weak demand from China could remain a drag,” he added.
Japan remained the country’s top export market for the month, with a 20.9 percent share of total exports amounting to $942.29 million, down 20.2 percent from a year ago.
The United States came in second with a 16.2 percent share, amounting to $730.97 million. It was followed by China, Hong Kong, and Singapore.