With exports slowing down, the Bangko Sentral ng Pilipinas expects a slower economic growth in the second half.
The Bangko Sentral ng Pilipinas expects a dismal performance of the global economy in the second half to dampen the country’s manufacturing sector as demand for exports slows down.
Given the challenges in the external environment, the BSP said domestic demand should be stronger than how it was in the first half. The drag from lower exports should be compensated by higher domestic consumption, both of private sector and the government, according to the BSP.
“Risks to global output conditions through the second half of the year are leaning toward a slower pace of world economic activity,” the BSP said in a report presented during the recent meeting of its Monetary Board.
The BSP cited the JP Morgan Global Composite Index Purchasing Manager’s Index (PMI), which decelerated to 52.2 in June from 52.7 in May. The index shows the trend in demand by corporate entities for goods such as raw materials for their own production.
This and other indicators, the central bank said, pointed to a further weakening of global demand.
About 30 percent of the country’s economy is accounted for by income from exports. While this has dropped from about 50 percent in the early 2000, economists said events on the external front could significantly impact on the performance of the domestic economy.
In June, the country’s exports fell 10.2 percent from a year ago to $4.09 billion. This pulled down the exports growth for the first semester to 4.1 percent.