PH exports decline anew in January

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PH exports decline anew in January
Weaker demand in manufactures and lower sales from petroleum pull down total exports growth, NEDA says

MANILA, Philippines – The country’s merchandise exports reached $4.36 billion in January, a 0.5% drop from January 2014’s $4.38 billion growth, the Philippine Statistics Authority (PSA) reported Tuesday, March 10.

December’s merchandise exports also dropped 3.2% due to lower outbound shipments of manufactures, total agro-based, and petroleum products.

Back-to-back declines were last seen in late 2011, analysts observed. On an annual basis, exports have been steadily growing in the last 3 years. In 2014, exports rose 9%, setting a new record at $61.8 billion. In 2013, it was an 8.8% growth and in 2012, a 7.9% growth.

For January 2015, weaker demand in manufactures and lower sales from petroleum pulled down total exports growth, according to the National Economic and Development Authority (NEDA).

But the 34% growth in export of mineral products and the 12.9% growth in agro-based products tempered the marginal decline, PSA added.

Economic Planning Secretary Arsenio M. Balisacan said the decline is “negligible” compared to most trade-oriented economies in key East Asian countries, which also posted negative outturns in merchandise exports during the period.

“This is also in view of weaker demand conditions and fragile manufacturing sectors in some of our major trading partners, Japan, Korea, and Singapore,” Balisacan said.

To date, the country’s export performance hit a record high of 19.7% in November, out-performing again the People’s Republic of China.

External factors

Balisacan warned of external factors that could impact the relatively well Philippine exports sector.

For instance, the recent developments in the US manufacturing sector may further strain exports over the short-run, despite the Japanese and Chinese manufacturing sectors slight recovery in February.

The composite index for the US manufacturing sector suggests a moderation in the next period, reflecting the downward trend in new orders and employment in the sector, Balisacan said.

While the current market consensus show that commodity prices are likely to remain low for the whole 2015, revenue from agro-based commodities such as coconut oil and copra may moderate given the stabilization of global supply.

But the electronics sector will continue to boom due to the increasing demand for gadgets and smart technologies, NEDA said.

Balisacan urged government to fast-track the programs directed to support the industrial and manufacturing development of the country.

For instance, the full implementation of the Industry Development Program of the Department of Trade and Industry requires support as it aims to enhance the competitiveness of key industries.

Gaps in infrastructure, including in energy and logistics, should also be addressed in order to enhance the competitiveness of Philippine exports, Balisacan said. 

Highs and lows

Among major commodity groups, higher shipments of copper metal, copper concentrates, and iron ore agglomerates pushed mineral products to grow to $201 million in January 2015 from $150 million in the same month in 2014.

Export earnings from agro-based products grew to $313.9 million in January 2015 from $278.2 million in January 2014, attributed to the increased outward shipments of other agro-based products, sugar, and coconut products.

Exports of electronic products continued to be strong with a 14.6% year-on-year increase in January 2015. This is largely backed by the 16% increase in outward shipments of semiconductors, which accounted for almost 69% of the country’s total electronic exports.

Gains from exports of manufactured goods though declined by 1.6% from $3.8 billion in January 2014 to $3.7 billion in the same period in January, due to lower outbound sales of other manufactured goods, wood manufactures, electronic equipment and parts, and chemicals.

Similarly, export receipts from petroleum products remain affected by the continued decline in global crude oil prices.

“While the gains in mineral and total agro-based products were not enough to compensate for the lower overseas sales of manufactures and petroleum products, their strong performance for the period helped moderate the decline in our total merchandise exports,” Balisacan said.

Low demand due to seasonal factors also contributed to the slack performance for the period.

Overall, Japan remained as the country’s top export market for the period, with 20.3% share in the total exports, amounting to US$ 882.6 million, albeit lower by 23.2% year-on-year.

The US came in second with 15.9% share, amounting to US$ 693.9. This is followed by the People’s Republic of China with 10.2% or US$ 445.4 million worth of exports.

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