MANILA, Philippines–The country’s exports are expected to contract in the first quarter before recovering by the end of the year on the back of improving global economic prospects.
This was according to “The Market Call,” the joint monthly publication of First Metro Investments Corp. (FMIC) and University of Asia and Pacific (UA&P), which said in its latest issue that the ongoing crisis in the Euro zone will continue to drag export earnings of emerging economies in the first quarter.
However, efforts to resolve the crisis in the Euro zone and favorable developments in the US economy may lead to improved export revenues in the second to the fourth quarters of this year.
“Exports are likely to recover, but are likely to remain in the low negative territory in the first quarter as Euro zone’s direct impact will provide a drag,” The Market Call said.
Last year, Philippine exports fell year-on-year by 6.9 percent to $47.97 billion as the economic crisis in Europe and the United States led to anemic demand for goods, such as those from the Philippines.
Electronics drove the contraction in exports. Economists said that in tough times, people tend to focus spending on basic goods and forego non-essentials such as electronics.
The Philippines exports electronics goods that are used by foreign buyers to manufacture consumer products, such as computers and cellular phones.
The export outlook for 2012 is positive amid signs of an improving US economy, the Philippines’ biggest export market. Since the start of the year, the US economy has been recording declines in jobless claims and increase in retail sales.
Echoing the consensus forecast, The Market Call said the Philippines may thus reverse this year the contraction in exports earnings last year.