PH seen posting 6.8% export growth

The Philippines is expected to register a 6.8-percent export growth this year, reversing the contraction last year, as China is seen importing more electronics goods in the second half.

This was according to Moody’s Analytics, which said that the latest slowdown in demand in China would likely be temporary. It said demand for electronics from the world’s second-largest economy will jump in the remainder of the year, benefiting electronics-exporting countries including the Philippines.

Electronics accounts for 50 to 60 percent of the Philippines’ export revenues. China is one of the Philippines’ biggest export markets. It was the fourth-biggest export market in April, accounting for nearly 11 percent of the Philippines’ total export revenue of $4.6 billion.

Latest report on China’s manufacturing sector pointed to a deceleration in activities, with the China Manufacturing Purchasing Manager’s Index—which takes into account new orders, suppliers’ deliveries and inventory—settling at 50.2 in June from 50.4 in May (an index below 50 indicates contraction, while an index above 50 shows growth).

“China has lost momentum in the second quarter, and this has hurt Philippine exports and production in recent months. But we expect China’s growth is at or near its trough so activity will pick up in the second half,” Katrina Ell, an associate economist for the Philippines of Moody’s Analytics, told the Inquirer.

Moody’s Analytics, a sister company of Moody’s Investors Service, is a unit of Moody’s Corp.

A 6.8-percent exports growth for the Philippines for this year, however, will be less than the government’s official target of 10 percent.

The 10-percent target was based on expectations that economic activity in the United States and eurozone, the other major export markets, will pick up this year.

Moody’s Analytics, however, said global demand might be weaker than many initially anticipated. The eurozone, for instance, is still faced with significant concerns over the debt woes of its member-countries.

“This (the 6.8 percent export growth projection) is less optimistic than the official growth target because exports are still facing significant headwinds from a weakened global demand,” Ell said.

The National Statistics Office earlier reported that Philippine exports amounted to $4.6 billion in April. This brought the four-month export revenue to $17.5 billion, up by 5.5 percent year on year.

The Bangko Sentral ng Pilipinas said the 10-percent export growth target for this year, coming from a nearly 7-percent contraction last year, was still attainable.

The BSP, which monitors inflows and outflows of foreign currencies, said the latest indicator of demand for Philippine exports was favorable.

It said the book-to-bill ratio improved to 1.2 percent in March from 0.95 percent in the same month last year.

Book-to-bill ratio, an indicator of future export earnings, is the ratio between the value of orders of goods sold by export-oriented firms and the value of their previous deliveries. A ratio above 1 percent indicates that the value of orders is higher than that of previous deliveries, which indicates that growth in export revenues will likely grow in the succeeding months.