MANILA, Philippines - The Philippine's annual exports fell by the most in eight months in August, casting doubt on the government's 2012 export growth goal and increasing the pressure on the central bank to ease policy further to support the trade-reliant economy.
Exports in August dropped 9 percent from a year earlier, dragging the value of shipments to its lowest since December, as semiconductors and electronics exports, the country's top export item, fell 14.9 percent, the National Statistics Office said on Wednesday.
The slowdown in exports will be taken into consideration alongside other economic indicators when the central bank reviews its monetary policy, Deputy Governor Diwa Guinigundo said shortly after the data was announced.
"It is necessary that the BSP recognises its implication on monetary policy," Guinigundo told Reuters. "Exports is only one of the many indicators we consider in ascertaining the strength or weakness of the global economy for which monetary policy should be pitched."
The drop in August exports, reflecting weakness in global demand, coupled with a manageable inflation outlook, strengthens the case for the Bangko Sentral ng Pilipinas to cut rates for the fourth time this year at its meeting this month.
"With the inflation surge slightly subdued now, we think it is very likely the BSP cuts interest rates by 25 basis points in the fourth quarter, and could happen as early as the meeting later this month," said Jeff Ng, economist at Standard Chartered in Singapore.
The Bangko Sentral ng Pilipinas, which next meets on Oct. 25 to review policy, has kept its overnight borrowing rate at a record low 3.75 percent following three cuts this year - the last in July - totaling 75 basis points. The cuts were aimed at shielding the economy against external shocks.
Export goal in doubt
Shipments to two of the country's top markets in August -- the United States and China -- posted double digit drops in annual terms, offsetting the rise in orders from Japan and Singapore.
Exports were up 5.4 percent from a year ago in the first eight months of the year, making it unlikely that this year's 10 percent exports target will be met.
"The realistic growth for this year is between 5 and 7 percent,", Trade Secretary Gregory Domingo told reporters. "I don't think we can still reach 10 percent."
The Semiconductors and Electronics Industries in the Philippines Inc said it would review its export growth forecast of 5-7 percent this year when the group meets later this month.