Electronics exporters face tough year ahead

Philippine electronics exporters may find 2013 to be another challenging year as far as profit generation is concerned, given projections that demand for electronics goods in the United States, Europe and Japan could remain anemic.

In a report on the sector, Moody’s Investors Service said electronics exporters from Asia could post either flat or declining export revenues this year because of the economic problems in the biggest markets.

“Weak economic recovery will continue to weigh on sales. Sales of consumer electronics products will remain negative or flat in Europe, the US and Japan, which (together) account for about 50 percent of total global sales,” Moody’s said in the report titled “Weak Demand and Structural Challenges Keep Outlook Negative.”

Moody’s said projections that economic growth in the US, Europe and Japan will remain slow could dampen consumer sentiment in the three markets. With their sentiment subdued, it said, demand for consumer electronics—with the exception of smartphones—will likely be weak.

Expectations that the US economy may continue to grow at a slow pace this year are anchored partly on the federal government’s fiscal problems that weigh down its ability to boost public spending and help raise growth.

“Although there may be a slight recovery in sales in the next few months as the result of a gradual economic improvement, we do not expect it to be strong or sustained,” Moody’s said.

On the eurozone, there are projections the crisis in the region could be contained but is unlikely to be fully resolved soon. The eurozone crisis, which is due to the debt problems of governments and poor health of banks and other financial institutions, has resulted in high unemployment rates that constrain consumer spending.

Japan is likewise seen to continue facing economic weakness that is discouraging consumers from spending on non-essentials.

The unfavorable outlook on demand for consumer electronics prompted Moody’s to assign a negative outlook on major electronics manufacturers in Asia, including Samsung, Sharp, Sony and LG Electronics.

In the case of the Philippines, electronics account for about half of the country’s total export revenue, which grew by 7 percent to $48 billion in the first 11 months of 2012.

Economic officials said the 7-percent growth in export revenues was a welcome development given weak demand in the key export markets.