Philippines export growth expected to remain sluggish in 2012

Philippine exports are expected to grow by 1.3 percent this year, a “marginal” expansion but still a turnaround from the 6.9-percent decline in 2011, according to DBS Group.

This latest forecast is a downgrade from the previous 3.7-percent growth penciled in for 2012, considering that official figures had been worse than DBS’ expectations.

The financial services firm said in a research note that improving demand for Philippine goods in the United States, which bottomed out in September, offered some hope for a turnaround.

“However, with slowing growth in Asia and a contraction in the Eurozone, external demand is likely to recover only at a gradual pace over the course of 2012,” DBS said.

The Singapore-based group added that because of relatively high numbers in the first semester of 2011, growth in exports would stay “anemic” in the same period this year before it would “spike sharply” in the last few months of this year.

According to the National Statistics Office, export receipts fell for the eighth consecutive month in December by 20.7 percent year-on-year, worse than the DBS forecast of a 16.7-percent decline.

This dragged down the full-year export performance. Total export receipts in 2011 contracted by 6.9 percent contraction, worse than DBS’ forecast of 5.1 percent.

“In absolute terms, the (December) figure edged to a 29-month low of $3.33 billion,” DBS said. “Electronics exports continue to languish, falling to a 34-month low of $1.52 billion, about 56 percent down from its all-time peak.”

The group added that aside from the negative swing in the electronics cycle, the Eurozone debt crisis has also exacerbated the problem, with Philippine shipments to the region already plunging below the global financial crisis levels.

In January, even before scaling down its growth forecast, DBS said Philippine exports were expected to remain subdued in the first semester and that the full-year performance will drag the growth of total domestic output.

Fluctuations in international demand for Philippine goods will remain the most important factor in determining gross domestic product growth in 2012, DBS said.