DBS sees PH exports dropping by 19.5% in September

MANILA, Philippines—Philippine exports may have contracted by 19.5 percent year-on-year in September due to the tepid global demand for electronics, according to DBS Group.

The financial services firm said in a new research note that the country’s export performance in September will be worse than the 13.7-percent contraction registered in August.

DBS said that with base effects staying unfavorable—meaning that last year’s figures would be difficult to surpass—its projected decrease in outbound shipments for September would translate to a 4.3 percent month-on-month decline.

“Export performance thus far this year has been appalling,” the group said. “In the first eight months of the year, exports were up by less than one percent [and] compared to the peak in September 2010, exports were still down by over 20 percent in August.”

DBS blamed this development on weak electronics shipments which, over the same time period, were down by close to 40 percent.

The group said that overall export has been buoyed by non-electronics shipments and that sequentially, or comparing consecutive months, a seasonal pickup should start to materialize from September to November.

“However, the expected rebound will be tempered by financial market volatility and persistently weak global demand for electronics,” DBS added.

In September, DBS said Philippine export revenues could grow by only 2 percent in 2011 as non-electronic goods were seen to cushion the drop in demand for electronics cargoes.

The forecast is much less than the government’s original export growth target of 10 percent this year.

Last month, DBS Group said it lowered its growth forecast for the Philippines in 2011 to 4.6 percent from 4.8 percent mainly because of the downtrend in export earnings.

“Even with a sequential [month-on-month] improvement in outbound shipments through the rest of this year, overall nominal exports growth is going to be anemic and may even slip into negative territory,” it said.

The group said that with shipment orders for North America-bound semiconductor still dipping in September, prospects for a meaningful uptick in electronics exports would be limited.

DBS said the bright spot in the economy lie with domestic demand. Remittances, despite the current crisis, remained relatively resilient, it added.

However, DBS said domestic demand growth would not be sufficient to offset the downward push now being exerted on the local economy due to developments abroad.