DBS outlook on electronics exports remains dim

DBS Group does not expect Philippine electronics exports to bounce back any time soon, adding that non-electronics continue will continue to prop up total outbound shipments.

The financial service provider said in a research note that the makeup of Philippine exports has changed significantly over the past two years, with electronics losing out to other products in terms of volume of manufactured goods shipped out, the Singapore-based firm said.

DBS said exports would rebound by less than 3 percent year-on-year in September. But the government earlier this week reported growth of 23 percent.

“Outbound shipments have been volatile of late, and much of this can be attributed to sharp swings in non-electronics manufactures exports,” DBS said.

“From May to August, machinery and transport equipment have been buoying overall exports, but this component fell back to trend in September,” it added.

But DBS added that there was a 1,400-percent month-on-month increase in the miscellaneous manufactured articles component.

“In level terms, this component was responsible for over half of the 26-percent month-on-month spike in exports,” DBS said. “This has happened before in May, but the jump is of a smaller magnitude. Electronics exports remained weak.”

The financial institution noted that, although electronics growth reached 1.1 percent month-on-month—the first positive reading in six months—the figure has largely been going sideways in level terms since April.

“In fact, the positive year-on-year growth figure can largely be attributed to the wearing out of high base effects from 2011,” DBS said. “We caution against too much optimism in this segment at this point.”

The company further said that over the past six months, the value of non-electronics manufactures exports actually exceeded electronics manufactures four times, a phenomenon that had not been seen before.

This diversification into non-electronics products has proven to be the key reason why exports have been holding up so well this year, DBS explained.