Exports down 5.6% to $58.6B in 2015

Weak global demand pulled Philippine export sales lower by 5.6 percent in 2015 to $58.6 billion from $62.1 billion in 2014, government data released yesterday showed.

The country’s chief economist warned that the slowing Chinese economy as well as cheaper global oil prices would likely sustain the export slump this year.

But despite declining merchandise exports, the National Economic and Development Authority (Neda) remained bullish on domestic manufacturing prospects as production volumes posted a faster growth last December.

Preliminary Philippine Statistics Authority (PSA) data showed that export revenues slid for the ninth straight month in December. Neda had earlier conceded that 2015 ended with a decline in export sales.

A 3-percent year-on-year drop brought to $4.7 billion the value of Philippine-made goods shipped overseas last December. “Lower sales in manufactures, agro-based and mineral products accounted for the drop, which tempered increased earnings from petroleum products,” Economic Planning Secretary Emmanuel F. Esguerra explained.

“Advanced and emerging economies continue to face difficulties. In particular, the slowdown in China due to ongoing structural transformation, as well as the contractionary fiscal policies in oil-exporting countries as they adjust to declining oil revenues, pose risks to the Philippine economy this year,” said Esguerra, who is also Neda director-general.

The Neda chief nonetheless noted that the respective economies of the country’s other top trading partners such as the European Union, Japan and the United States were seen “slightly” recovering in 2016.

“As soft global demand is expected to continue, the challenge is to be able to expand export market destinations and diversify product offerings,” Esguerra said.

For one, “expanding market opportunities in emerging export markets such as India and Mexico can boost the country’s merchandise exports, as they have been increasing their demands for consumer products,” he pointed out.

Esguerra also urged the Philippines to take advantage of the Asean Economic Community (AEC) as integration went in full swing late last year.

The Neda chief also said the government must remain committed to the Manufacturing Restructuring Program (MRP). “Implementing the MRP will rebuild the domestic production base and improve competitiveness through innovation. Given the high multiplier effects and potential for employment generation, the revival of the manufacturing sector is expected to spur domestic employment and investments in the country,” Esguerra said.

Last December, the manufacturing sector’s output, as measured by the Volume of Production Index (VPI), grew by 4.9 percent, faster than the expansion of 4.7 percent a year ago and 4.4 percent a month ago, the PSA’s latest Monthly Integrated Survey of Selected Industries showed.

Esguerra attributed the manufacturing growth in December to an increase in construction activities as well as cheap oil.

“Despite the unfavorable economic global climate, the sector remains optimistic in 2016. With low and stable inflation and good employment opportunities, consumers have increased spending power, which strengthens domestic demand. The continued drop in petroleum prices will also keep operating costs minimal and this is expected to boost the volume of production,” Esguerra said.