Emerging Asia sees recovery of export earnings

The Philippines and other emerging Asian nations are likely to see export earnings recover in 2014 as improving performance of the world’s biggest economies push global demand for goods. AFP FILE PHOTO

MANILA, Philippines—The Philippines and other emerging Asian nations are likely to see export earnings recover in 2014 as improving performance of the world’s biggest economies push global demand for goods.

According to the Institute of International Finance (IIF), an organization of financial institutions worldwide, the purchasing managers index (PMI) for the manufacturing sector of key export markets was on the rise.

In its latest “Global Economic Monitor” report, IIF said growth in the manufacturing sector of the export markets indicated that demand for raw materials and intermediate goods, including those coming from emerging Asian countries, could rise over the short term.

The manufacturing PMI for China improved to above 50 points in October after hovering below the threshold earlier this year, IIF said.

In the same period, IIF said, the manufacturing PMI for Japan rose to 54.2, the highest in three-and-a-half years, while that for the United States and the euro zone also stood well above 50 points.

A PMI of at least 50 indicates growth in purchases, while a PMI below the threshold indicates shrinking demand. A PMI of above 50, therefore, signals an improvement in revenues for exporting countries like the Philippines.

The IIF’s export projection was consistent with that of the Philippine government, which said a more solid recovery in exports could be seen in 2014.

In the first semester of this year, Philippine exports shrank on the back of weak demand from industrialized countries, whose economies remained fragile.

The country’s exports started to recover by the second half of the year, but the rebound was minimal—not enough to pull the year-to-date growth to positive territory.

In the first 10 months of the year, Philippine exports fell by 0.1 percent to $40.05 billion. As a result, the country is now hard pressed to meet the government’s 10-percent exports growth target for the year.

According to Arsenio Balisacan, director general of the National Economic and Development Authority (Neda), Philippine exports were expected to grow in the last half of 2013, but this would not be enough to meet the full-year target. But he said a more significant rebound could be expected in 2014 given rising demand from industrialized economies and China.

“In the emerging market world, growth momentum has been supported by a rebound in Chinese gross domestic product (GDP) growth in the third quarter, and generally easier external financial conditions since early September,” IIF said in the report.

China’s GDP grew by 7.8 percent in the third quarter, accelerating from 7.7 and 7.5 percent in the first and second quarters, respectively.

“Exports are being revived across the region as economic growth picks up. Activity in China is firming up, helped by mini-stimulus measures,” IIF said.

Japan, the United States, and China are the Philippines’ biggest export markets. In September, they accounted for 22 percent, 15 percent, and 13 percent of the export revenues for the month worth $5.05 billion.