Stronger peso dims 2012 export outlook

By Cai U. Ordinario, BusinessMirror

Posted at Jul 11 2012 07:40 AM | Updated as of Jul 11 2012 06:39 PM

MANILA, Philippines - Despite exports posting a 17-month high toward the middle of the year, the National Economic and Development Authority (Neda) and some economists expressed concern that the appreciation of the peso and the global slump in electronics may still threaten export growth in the coming months.

The National Statistics Office (NSO) said on Tuesday that the country’s merchandise exports grew 19.7 percent in May, the highest since December 2010, when exports grew 26.5 percent.

May 2012 export earnings reached $4.93 billion, a double-digit growth from the $4.12 billion in May last year. In January-May, exports grew 8.4 percent to $22.443 billion.

“It’s possible that we will sustain this growth. My only concern, of course, is the exchange rate. The peso has been appreciating, and that’s not good for exports. We have to watch that carefully,” Neda Director General Arsenio M. Balisacan told the BusinessMirror.

Balisacan said the 19.7-percent growth in export earnings in May was still “very encouraging.” He added that the Philippines, at a time when other countries are reeling from the crisis in developed countries, is one of the countries in Southeast Asia whose economy is expected to grow this year. NSO data showed that export earnings recorded a 3-percent growth in January, 12.8 percent in February and 7.6 percent in April. The country’s export earnings, however, contracted 0.8 percent in March.

Balisacan said the country’s export growth benefited from less dependence on developed countries like the United States, which is still ailing from a weak economy. He added the slack in exports has been taken up by exports to Asian countries, which require various commodities aside from electronics.

“[The growth is] pretty respectable and it is [driven by] non-electronics. It used to be 60 percent to 70 percent of our exports are electronics, [but] because of electronics being on the downhill for some time now, these other non-electronics exports [are taking up the slack]. That makes our exports now less vulnerable to shocks from any country in the world,” Balisacan said.

But former Budget Secretary Benjamin Diokno said sustaining the double-digit growth in May exports and the 8.4-percent growth between January and May could be “far-fetched” due to the grim global economic outlook.

Diokno added that the export growth in May could have benefited more from “base effects” given that export earnings posted a contraction of 2.9 percent in May 2011.

He said the growth in export earnings was driven by only two commodity groups—metal components, which grew 162.4 percent, and ignition-wiring and other wiring sets used in vehicles, aircraft and ships, which grew 122 percent.

“The question is whether these strong performances can be sustained or whether these are restocking phenomena [that] could be stalled by a slowing global economy? There is [also] some element of base effects,” according to Diokno. “Given the sharp deterioration in global economic outlook in recent weeks, double-digit full year growth for Philippine exports is possible but far-fetched,” he said.

Shipments of electronic products continued to dominate total export earnings with a share of 38 percent. Earnings from electronic product exports reached $1.87 billion in May 2012, a contraction of 0.7 percent from the $1.89 billion posted in the same period last year.

On a monthly basis, however, electronic product exports grew 14.5 percent from $1.64 billion in April 2012.

Semiconductors continued to account for the lion’s share of total electronic exports with 28.7 percent. Earnings from semiconductor shipments grew 0.7 percent to $1.42 billion in May 2012 from $1.41 billion in May 2011.

The country’s top export markets were Japan including Okinawa, which accounted for 23 percent; the United States including Hawaii and Alaska (14.5 percent); and Thailand (11.5 percent).

Exports to Japan amounted to $1.13 billion in May 2012, a growth of 81.5 percent from last year’s $624.26 million while exports to the US reached $714.06 million, 1.6 percent higher than last year’s $702.56 million.

Shipments to Thailand grew the strongest with 221.9 percent in May 2012. Exports to the country reached $568.92 million in May 2012, higher than the $176.74 million in May 2011.

Shipments to East Asia continued to dominate by accounting for 47.2 percent of total exports. This region accounted for $2.33 billion, or a 25.6-percent growth in May 2012 from $1.85 billion in May 2011.

Exports to Asean members accounted for 22.5 percent of total exports. Shipments this year reached $1.11 billion or a 55.4-percent increase from last year’s $715.1 million. Asean (Association of Southeast Asian Nations) groups the Philippines, Brunei Darussalam, Cambodia, Indonesia, Laos, Malaysia, Myanmar, Singapore, Thailand and Vietnam.

Merchandise exports to the European Union accounted for only 9.8 percent of the total in May 2012. The value of exports to the bloc reached $481.2 million or a 10.5-percent growth from $435.57 million last year.