Weak demand weighs further on exports
EXPORTS fell for a fourth straight month in July, as China’s economic slowdown took its toll on Philippine manufacturers.
Preliminary data from the Philippine Statistics Authority (PSA) show that merchandise export receipts fell by 1.82% year on year to $5.327 billion as the third quarter began, compared with an 11.66% gain a year earlier.
July’s fall was steeper than June’s 1.79% drop, but pulled back from the contractions of 4.1% and 17.4% in April and May, respectively.
PSA attributed the decline in July exports to shrinking shipments of eight out of 10 major commodities, namely: machinery and transport equipment; articles of apparel and clothing accessories; metal components; chemicals; coconut oil; ignition wiring set and other wiring sets used in vehicles, aircraft and ships; as well as “other manufactures” and “other mineral products.”
“The lower value of outward shipments can be traced to reduced exports of total agro-based products and mineral products, but was moderated by sustained strong performances recorded from manufactured goods, most notably electronics and petroleum,” Economic Planning Secretary Arsenio M. Balisacan said in a statement.
“Although agro-based exports account for only 5% of the Philippines’ total exports, its implication to the domestic economy is significant as the agricultural sector hosts a sizeable portion of the
country’s work force,” he added.
Remrick E. Patagan, research director at the Institute for Development and Econometric Analysis, Inc., said the “broadbased slump” last July owed to “continued weakness in external demand.”
“Export growth is likely to continue to struggle for the rest of the year, though we might see some improvement due to the holiday season later in the second half. All in all, we may see marginal to flat export growth for 2015, barring any worsening in the external demand environment.”
The July export print brings the year- to- date contraction to 4.1% year-on-year.
A source of hope is the electronics sector, which makes up more than half of Philippine merchandise exports receipts. PSA data show receipts from electronic products — which accounted for 52.9% of total export earnings — surged 34.6% annually to $2.818 billion last July.
Data supplied by the Semiconductor and Electronics Industries in the Philippines, Inc. ( SEIPI) show year-to-date value of electronics exports having grown 9.1% to $16.29 billion from $14.93 billion in 2014’s comparable seven months — way above SEIPI’s 0-4% target for the entire 2015, already the second downward revision of the original goal of 5-7%.
SEIPI President Danilo C. Lachica said the group cut its growth target to 0-4% “primarily due to the weak global economy and the recent developments in China.”
Manufactured goods — which made up 86.6% of total shipments — edged up 4.3% annually to $4.614 billion in July.
July’s weak export numbers were reflected in manufacturing data that showed a contraction for a third straight month. In a separate report, the PSA said the volume of production index ( VoPI) fell by 0.5% in July, slightly narrowing from 0.9% and 1.6% contractions in May and June, respectively. A year earlier, VoPI grew 7.6%.