November imports at 3-month low, weakness to persist

Reuters

Posted at Jan 25 2013 10:33 AM | Updated as of Jan 25 2013 07:09 PM

MANILA - Philippine imports climbed 2.2 percent to $5.14 billion in November from a year earlier, the slowest pace in three months, with the trade sector expected to continue to struggle this year.

But despite weakness in overall trade, the Philippine economy is expected to sustain its strong momentum into 2013, with state spending on infrastructure likely to support growth.

The Southeast Asian country posted a trade deficit of $1.59 billion in November, bringing the cumulative deficit in the first 11 months of the year to $8.4 billion, the statistics office said on Friday.

Jeff Ng, economist at Standard Chartered Bank in Singapore, said "We expect some sort of rebound from this month's (November) very disappointing results, but overall I think headwinds are beginning to form for the external sector this year.

"We think it could be likely that net exports could subtract from overall growth this year, due to the likelihood that imports growth will catch up with exports growth in 2013. I think exports growth did quite well in 2012 and there is concern whether the performance could be repeated this year," he added.

He further said, "We still think the domestic economy will remain resilient, and we expect the overall GDP to grow 5.8 percent, still holding up pretty well. We are looking for improvements in the second half as the global economic climate improves. We still think the electronics sector has not performed up to its potential yet, and we look for some improvements in the sector."

Meanwhile, Emilio Neri, economist at the Bank of the Philippine Islands in Manila, noted "There's really something structural happening in the electronics sector. They should be restocking at this point if there truly is recovery in China and other big markets in the
region."

He continued "It's a signal that electronics exports will persistently stay weak in the early part of 2013, because they are not building new raw material inventory. We're hoping that non-traditional items will be growing fast enough to bring us to single-digit expansion this year in exports."

"Fortunately, electronics has limited valued added, so it will have a minimal impact on the broad economy. The current growth momentum can still be sustained."

China was the country's top import source in November, accounting for 11.3 percent of total purchases, followed by Japan with 9.6 percent and the United States with 9.5 percent.

Imports from East Asia, the top import source by economic bloc accounting for 37.6 percent of the total, rose a slight 0.4 percent in November from a year earlier.

Imports from Southeast Asia, the second largest source of imports, were up 10.8 percent from a year earlier.

The country's principal imports are inputs for the semiconductor and electronics industry, also the biggest export sector and a major contributor to the economy. Apart from electronic parts, other top imports in November were mineral fuels, transport equipment, and industrial machinery.

The Philippines imports nearly all of its crude oil.

The Philippine central bank lowered its 2012 trade growth estimates in November, cutting the export growth forecast to 8 percent from 10 percent and the import growth forecast to 7 percent from 12 percent.

The industry group Semiconductors and Electronics Industries in the Philippines Inc expects exports in the sector will be flat in 2012 due to sluggish demand, but recover this year and grow 5 percent to 6 percent.

Exports, which account for about two-fifths of the country's GDP, climbed 5.5 percent in November from a year earlier, the weakest rate in three months, and electronics and semiconductor shipments, which dominate exports, rose 13.3 percent from a year ago.

The Philippine economy may have grown around 6.5 percent in 2012, the economic planning chief said on Tuesday, higher than the government's 5-6 percent target, with growth momentum expected to be sustained this year, backed by infrastructure spending.

The government will release fourth-quarter GDP data around 0200 GMT on Thursday.