The expected turnaround of Philippine exports this year may lead to a revival of the electronics industry in two years’ time, according to DBS Group.
The financial services institution said in a special report on the Philippines that a cyclical rebound in electronics exports could set in this year after the country posted a 32-percent decline in 2011.
DBS said improving demand for electronics in the United States would suggest a bottoming out in the electronics cycle.
Also, the Singapore-based group said the disruption in electronics manufacturing capabilities in Thailand could lead to a short-term shift in demand toward the Philippines.
“However, a sharp recovery is not expected given ongoing concerns about the eurozone debt crisis and the state of the US economy,” it added.
DBS further said that the country’s performance in electronics exports continued to lag compared with other countries.
“Current weak electronics exports can be attributed to low investment levels over the last decade and a heavy dependence on the semiconductor segment,” the group said.
“Resurgent electronics investments in 2010 and 2011 should spark a revival in the electronics industry from 2013 onwards.”
Based on DBS monitoring, electronics investments totaled $2.5 billion in 2011, better than “an already high” $2.3 billion in 2010.
“Total investment for 2010 and 2011 is equivalent to the investment from 2002 to 2009 combined. The country may also benefit with firms looking to diversify their electronics manufacturing base away from Thailand following the flood disaster,” DBS said. “We expect electronics exports to resume a growth trajectory after staying essentially flat over the last decade.”
Last month, DBS said Philippine exports could grow by 1.3 percent this year, a turnaround from the 6.9-percent decline in 2011.
According to the National Statistics Office, export receipts fell for the eighth consecutive month in December at 20.7 percent year on year, worse than the DBS forecast of 16.7 percent.
This brought the full-year export performance to a decline of 6.9 percent, lower than DBS’ own projection of 5.2 percent.