6th straight month of decline for exports

Philippine exports in October fell 14.6 percent as electronic shipments, which dominate exports, contracted 36.5 percent from October 2010.

Philippine exports in October fell 14.6 percent to $4.09 billion from $4.79 billion a year ago, a sixth straight fall that added to concerns that economic growth may miss the government’s target for 2011.

Electronics shipments, which dominate exports at $1.9 billion, contracted 36.5 percent from a year earlier, the statistics office said Tuesday. Compared with the previous month, however, electronics was up 4.6 percent.

Exports account for about two-fifths of the country’s GDP based on expenditure terms. Electronics made up 46.4 percent of October export revenues.

Exports to Japan, the country’s top export destination in the month, rose 8.6 percent in October from a year earlier. Shipments to the United States, the second-biggest market, were down 12.8 percent from a year earlier. Exports to China, the third-biggest market, fell 0.8 percent from a year ago.

Exports to Eastern Asia—the top export destination by economic bloc accounting for 49.5 percent of total shipments—rose 1.8 percent from a year earlier. Southeast Asia and the European Union were the second and third top economic blocs.

Exports in January to October were down 4.3 percent from a year ago.

Eugene Leow, economist at DBS in Singapore, said: “The (month-on-month) improvement in electronics exports can probably be attributed to restocking and seasonal factors going into the end of the year. However, the final demand outlook in the coming quarters still look decidedly weak. Exports, which dragged heavily on growth in 2011, will continue to face headwind in 2012.”

Jun Neri, economist at Bank of the Philippine Islands, added: “If you remove electronics, we are seeing more than 20-percent growth, which is quite encouraging. The problem is down the road if Europe does enter a recession even the non-electronics component might weaken. I suppose this might cause some upward pressure on the currency market especially after the seasonal inflows of remittances start to slow down in early next year. We anticipate that if neither of those two items—exports of electronics and non-electronics show a remarkable rebound, the pressure will be on the currency.

He said other non-traditional markets like Africa and even intra-Asia have been able to take up to some extent some of slack that was left by Europe and the US, “but whether it will be enough to compensate for traditional destinations is a big question mark.

“We are hoping that monetary and fiscal authorities will come up with quick mitigating solutions to counter these external developments,” Neri said.

Radhika Rao, economist at Forecast Pte in Singapore, said shipments picked pace in real terms on bunched-up holiday demand and probably some replacement demand spilling over from affected Thai manufacturers.—Reuters