Recovery of export sector to boost GDP growth

The surge in electronics exports may drive up the growth of the Philippine economy above the forecast of 4.2 percent this year, according to DBS Group.

The financial service provider said in a research note “the outlook for exports in the near term has become more optimistic.”

Export earnings in the past two months have grown much higher than DBS expectations, with the February shipments growing by 14.6 percent year on year compared to its forecast of 3.5 percent.

Before that, exports increased by 3 percent in January, ending eight months of consecutive declines, which DBS had expected to continue.

“Driven by resurgent electronics exports, there is upside risk to our 4.2-percent GDP [growth domestic product] growth forecast for this year,” DBS said.

The Singapore-based group added that in terms of volume, a month-on-month surge in electronics “underpinned the strong showing” in February—an improvement that “can be sustained for now.”

“Inventory drawdown over the last few months should lead to a short-term restocking cycle, especially in the critical semiconductor segment,” it said.

Also, DBS said that in terms of value, electronics exports have recovered to “levels not seen since the first semester of 2011 before the eurozone debt crisis escalated.”

DBS said data from North America, South Korea, Taiwan and Singapore had shown signs of stabilization and could hint at some pickup in final demand.

“Inventory restocking after an extended drawdown in the second half of 2011 probably explains part of the current recovery,” the group said. “However, there are also tentative signs that external demand may be stabilizing.”

Even then, DBS expressed caution that the outlook on Philippine exports for the coming quarters “is still cloudy amid persistent global growth concerns.”

In March, DBS revised its growth forecast for Philippine exports to 4.5 percent this year, faster than previous estimates.

This latest projection is higher than the previous DBS forecast of 1.3 percent, which was also a revision of an earlier expectation of 3.7 percent.