UPDATE: Exports hit 3.5-year low

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(Updates with details of exports data, comments from NEDA)

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PHILIPPINE exports fell 17.4 percent year-on-year in May, hitting their lowest level in more than three years, with seven major industry sectors posting declines during the month, preliminary government figures show.

The fall in May was larger that the 4.1 percent drop recorded in April and erased a 15.6 percent increase posted in May 2014, according to figures released Friday by the Philippine Statistics Authority (PSA).

The decline also marks the steepest since December 2011, when outbound shipment contracted by 18.9 percent.

Figures from the PSA show exports eased to $4.899 billion in May from $5.932 billion a year earlier, mainly traced to mineral products, machinery and transport equipment, other manufactures, electronic products, articles of apparel and clothing accessories, and ignition wiring set and other wiring sets used in vehicles, aircraft and ships.

Exports during the first five months of 2015 totaled $23.526 billion, down 5 percent from $24.772 billion in the year-earlier period.

Global slowdown

The National Economic and Development Authority (NEDA) said in an official statement the recent decline in Philippine exports, as well as in many Asian economies, reflects a general consensus on the market outlook for the near term, which points to a slowdown in the global economy.

The Philippines recorded the largest decline in export revenues among major trade-oriented economies in East and Southeast Asia, said NEDA Officer-in-Charge (OIC) and Deputy Director General Emmanuel Esguerra.

A “slowdown in global trade due to the weakening of China, as well as the fiscal crisis in the Eurozone, will certainly spill over globally, although the magnitude of the impact remains to be seen,” he said.

After two consecutive months of marginal increases, overseas sales of manufactured goods registered their largest monthly drop for the year of 9.5 percent to $4.3 billion in May, from $4.7 billion in the same period last year.

This was due to lower revenues from semiconductors, machinery and transport equipment, wood manufactures, electronic data processing, and other manufactures, the NEDA said.

“Global output of manufacturing and services is currently weak, trending slightly above expansionary levels amid lackluster global demand,” said Esguerra.

Similarly, exports of mineral products plunged 66.5 percent to $209.7 million in May from $626.8 million a year earlier due to lower earnings from copper metal, copper concentrates and other mineral products.

Furthermore, export revenues from agro-based products dropped 32.3 percent, reversing a 13.4 percent year-on-year expansion in the same month of last year.

The NEDA attributed this to lower earnings from coconut and sugar products, fruits and vegetables, such as bananas.

Greece, China double-whammy

The socioeconomic planning body warned that the Philippines’ export performance is likely to remain constrained by volatility in the international markets triggered by the Greek debt crisis and the economic slowdown in China.

“Given that these external shocks cannot be prevented, government measures to mitigate the possible negative effects should be immediately implemented as warranted,” Esguerra said.

Esguerra stressed the need for strengthening support to the manufacturing sector through improving its competitiveness and productivity, and ensuring safety nets for vulnerable workers, while initiatives to support agriculture and its linkage to the manufacturing sector should be sustained. These include infrastructure, financing, risk mitigation, and business-continuity and contingency planning

“As the external environment continues to be unfavorable and fragile, strengthening domestic demand should be a priority,” he said.

Japan remained the Philippines’ top export market for the month, with a 24.6 percent share of the total, or $1.204 billion. The value of exports to Japan reflects a 7.6 percent drop from the year-ago level.

The United States came in second, with a 14.2 percent share, or $696 million. It was followed by China, Hong Kong and Singapore.

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