MANILA, Philippines (UPDATED) – Philippine exports fell by 10.8% in October due to continued sluggish external demand, the National Economic and Development Authority (NEDA) reported on Thursday, December 10.
The Philippine Statistics Authority (PSA) reported that merchandise exports fell to US$4.6 billion in October from US$5.1 billion recorded in the same period last year.
The country’s export growth has been on a downward trend since April this year.
Economic Planning Secretary Arsenio Balisacan said the lingering sluggish global demand, as well as the slack in industrial activity in the US and the recent economic adjustments in China, brought down the country’s exports.
“Exports performance in the succeeding months is also anticipated to remain weak given the slowdown in economic growth of the country’s major trading partners,” he said.
All key commodities registered drops in exports for October, particularly manufactured goods, agro-based products, mineral products, and petroleum products.
Manufactured goods, which make up 88.5% of the country’s total merchandise exports for October 2015, declined by 5.1%. This sector fell to US$4.1 billion from US$4.3 billion in October 2014.
But Balisacan said despite the decline, such is an improvement from its double-digit drop of 24.7% in September, following the slight improvement in the global manufacturing industry.
“This is particularly due to the recovery of shipments of electronic products that grew by 7.3%, on the back of stronger exports in semiconductors which grew by 11.7%” he said.
The country’s manufacturing sector, meanwhile, slightly declined in October, which NEDA said was due to the adverse effects of El Niño and continued weakening of demand from China.
In PSA’s latest Monthly Integrated Survey of Selected Industries, the manufacturing sector’s Volume of Production Index decreased by 1.8% while its Value of Production Index continued to fall at 9.2% from its drop of 4.8% in September 2015. The Volume of Net Sales Index and Value of Net Sales Index posted steep declines of 5.8% and 12.9%, respectively.
But the agency said that factory output is expected to rebound in the coming months and years ahead.
“… For this holiday season, driven by strong domestic demand, business firms are expected to increase production output in anticipation of brisker business activities. This will translate to higher volume of sales and possible expansion of businesses and new product lines,” he added.
Exports of mineral products also declined by 56.1% to US$150.9 million in October 2015 from US$343.9 million in the same month last year due to lower earnings from copper metal, copper concentrates, and other mineral products.
Balisacan said the lower volume of export of mineral products reflects the continued decline in the prices of metal commodities in the global market. International prices of iron ore and copper, which are the country’s two top minerals exports, declined significantly, resulting in lower revenue.
Petroleum exports also dropped by 57.9%, while agro-based products likewise contracted by 29.8% to US$264.5 million from US$376.6 million revenues registered in the previous year.
Structural and economic adjustments in China have affected Philippine export performance, with revenue losses dragging down exports growth for October.
From January to October 2015, export revenues to China contracted year-on-year by 24.7%.
“As the global economy remains fragile, export-oriented firms in the Philippines should recalibrate its production and marketing processes to serve the domestic market instead to facilitate this,” Balisacan said.
He also cited the need to collaborate with the private sector to facilitate marketing export products to the domestic market.
But the government is staying positive on exports rebound, as substantial improvement in Japan’s industrial sector may partially offset the downward pull from weakness in the US and China in the coming months.
“There is strong international demand for Japanese products and this will be a major factor in sustaining robust industrial growth,” he added.
Balisacan also mentioned the need to tap the potential of the services sector, specifically tourism, indicating an expected surge of demand for services related to recreation and travel.
“Several manufacturing firms are also considering relocating to emerging economies. The country should thus take advantage of this opportunity by improving its competitiveness as an investment destination,” he said. (READ: 200 Japanese firms in China want to move to PH) – Rappler.com
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