The value of merchandise exports dropped for the 12th straight month last March, with the 15.1-percent year-on-year decline to $4.6 billion also the steepest in six months amid weak global trade.
Even as the country’s chief economist urged exporters to look for new markets for Philippine-made goods while the government supported them by easing export regulations, the National Economic and Development Authority (Neda) remained optimistic that robust domestic demand would sustain manufacturing growth.
A preliminary Philippine Statistics Authority (PSA) report released Tuesday showed the sharp year-on-year drop from $5.4 billion in exports in March last year was due to lower volumes shipped out across seven of the top 10 export commodities: Articles of apparel and clothing accessories; chemicals; metal components; machinery and transport equipment; electronic equipment and parts; other manufactures, and ignition wiring set and other wiring sets used in vehicles, aircraft and ships.
The exports decline last March was the fastest since the 15.5 percent in September last year.
Among 11 selected Asian economies, the decline in Philippine export sales was also the steepest that month, dragged by “lower revenues from several major trading partners,” Neda said.
Economic Planning Secretary Emmanuel F. Esguerra noted that “the country’s traditional trade partners continue to post subdued growth, global trade is not expected to pick up soon and China’s slowdown is impinging upon overall growth in emerging economies.”
“To be able to reach out to other potential export markets and sell our products, it is crucial to ease government regulation and strengthen market intelligence gathering in partnership with the private sector. We also need to maximize the opportunities in trade agreements and economic groupings particularly within the Asean region,” said Esguerra, who is also the director-general of Neda.
At the end of the first quarter, total exports stood at $13.1 billion, down 8.4 percent from $14.3 billion a year ago.
“Given the growth of merchandise exports in the first quarter, the Philippines needs to grow by at least 8.3 percent in the next three quarters to attain the low-end projection of the Export Development Council of 5.4 percent in 2016,” according to Esguerra.
But while exports remained a challenge, the Neda chief pointed to a strong domestic manufacturing sector. The PSA’s latest Monthly Integrated Survey of Selected Industries showed manufacturing output, as measured by the Volume of Production Index or VoPI, grew 7.8 percent in March, although slower than the 14.9-percent expansion a year ago.
“We attribute first-quarter growth to robust manufacturing production that was supported by strong household spending and sound macroeconomic fundamentals,” Esguerra said.
According to Neda, higher production of chemicals, food as well as electrical and non-electrical machinery boosted manufacturing growth during the first quarter. “The positive performance of the manufacturing sector is expected to continue and drive higher growth in the first semester of the year. The buoyant domestic demand, stable inflation, low power rates and continued decline in world crude oil prices will continue to support the growth of the sector, and at the same time, will help cushion the effect of slow global economic growth,” Esguerra said. Ben O. de Vera