Philippine export earnings may pick up in H2

The country’s export sector may enjoy a faster, double-digit growth in earnings in the second half of the year given the favorable economic performance of neighboring countries and their increasing demand for Philippine-made goods.

According to First Metro Investments Corp. (FMIC) and University of Asia and the Pacific (UA&P), the share of neighboring Asian countries in the Philippines’ export earnings has been rising steadily, supporting growth of the domestic trade sector offsetting the impact of a weakened US economy.

Still, the likelihood that the US economy will improve in the second half bodes well for the Philippine export sector, FMIC and UA&P said in their latest monthly publication, Market Call.

“Exports are expected to get back to a double-digit trend, as the US economy returns to a more robust growth, coupled with the continuing rapid growth in China and the East Asia and Asean region, where some 50 percent or more of [Philippine] exports now go,” the two institutions said.

Latest export data from the National Statistics Office showed that the country’s exports amounted to $20.625 billion in the first five months of the year, up by 7.5 percent from $19.185 billion in the same period last year.

While the growth rate was welcomed by the export sector, this marked a slowdown from last year’s double-digit growth.

FMIC and UA&P said the growth rate would likely go back to the double-digit territory in the second half as various economies, which serve as export markets for Philippine-made goods, post improved growth rates.

The two institutions said that an accelerated increase in export earnings would boost overall inflows of dollars into the Philippines.

Consequently, the peso, which has already appreciated by about 4 percent since the start of the year, and is now hovering in the 42-to-a-dollar territory, is expected to appreciate further in the months ahead.

FMIC and UA&P said the dollar inflows into the country will also be boosted further by growth in remittances from overseas Filipino workers.

“Given the export recovery, OFW remittances picking up pace and foreign investors flocking into the domestic financial markets, there is a strong likelihood of a continued appreciation bias of the peso,” FMIC and UA&P said. “However, because of the unresolved EU debt crisis and Middle East tensions, periodic depreciation bouts are inevitable.”