Philippine exports had their worst performance in two years in August, and the outlook for the rest of 2011 is bleak after an industry group forecast a bigger drop than earlier expected for electronics shipments.
In August, shipments of electronics and semiconductors, the country’s main exports, dropped 30.6 percent from a year ago, the steepest fall since April 2009, with overall exports during the month down 15 percent, the worst month-on-month decline since September 2009.
The latest data raised doubts the government will hit its growth forecast this year. Manila has forecast growth in gross domestic product of 5 to 6 percent this year, and a 9 to 10 percent increase in exports.
Exports of electronics and semiconductors are now expected to fall 18 percent this year, worse than the 5 percent drop predicted in August, said Ernie Santiago, president of the Semiconductors and Electronics Industries in the Philippines Inc (SEIPI).
While there has been some rebound in consumer spending on technology products, industrial activity has yet to increase, he said.
“Companies are not buying, upgrading tech products,” Santiago said in a text message to Reuters.
Total shipments in the first eight months grew just under 1 percent.
In 2009 when the impact of the global financial crisis was most felt, electronics and overall exports both shrank by about 22 percent.
The Main Bugbear
“Weak demand for electronic products from key Western markets remains the main bugbear, with near 1 percent peso depreciation in the month offering little competitive support to the exporters,” said Radhika Rao, economist at Forecast Pte in Singapore.
“Overall data validates the bearish outlook on the external sector for the second half of the year, with full-year growth likely to average in single-digits compared to 35 percent rise last year,” she said.
Exports, accounting for about two-fifths of the country’s GDP based on expenditure terms, dropped 8.5 percent in August from the previous month, the sharpest fall since November.
Shipments to Japan, the country’s top export destination in August, rose 7.3 percent from a year earlier, as Japan continued rebuilding efforts after a massive quake and tsunami in March.
But orders from the second and third top markets, United States and China, dropped 4.5 percent and 5.4 percent respectively from a year ago.
“The outlook remains poor as these trends are likely to persist. Next month should see an especially large fall from the record high reached in September 2010,” said George Worthington, an economist at IFR Markets in Sydney.
“The weakness in electronics ensure that the government’s target for export growth of around 9 to 10 percent is unattainable,” he said.
The government is reviewing its macroeconomic forecasts and is expected to cut its 2011 growth and trade estimates.
The World Bank last week cut its growth forecast for the Philippines to 4.5 percent this year and 5.0 percent in 2012, from 5.0 and 5.4 percent previously.
Last month, the Asian Development Bank trimmed its growth estimate for the Philippines to 4.7 percent in 2011 and 5.1 percent in 2012, from 5.0 and 5.3 percent previously, with similar cuts in its forecasts for developing Asia. (Reuters)