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MERCHANDISE exports recorded their worst contraction in nearly two years last August, plunging by 15.1% from a year ago, the National Statistics Office yesterday reported.
This was the steepest decline since September 2009, when exports fell by 18.2% ahead of a late recovery that extended into 2010.
August exports totaled $4.05 billion, down from $4.77 billion a year earlier. Month-on-month, exports also declined by 8.5% from July’s $4.43 billion.
Socioeconomic Planning Secretary Cayetano W. Paderanga, Jr. noted that exports were expected to take a hit given reduced economic growth outlooks for the country, but added that the public-private sector Export Development Council (EDC) had yet to meet to revise the current export growth target of 10%.
“Our staff will have to meet with the staff of the EDC,” Mr. Paderanga said in a telephone interview.
Exports are still up year to date, but by a miniscule 0.66%. For the eight-month period, merchandise exports reached $33.24 billion, higher than the $33.02 billion recorded in the same period last year.
Exports have been declining for four consecutive months, dragged down by the poor performance of electronics, which has led the Semiconductor and Electronics Industries in the Philippines, Inc. (SEIPI) to again revise its outlook for 2011. SEIPI now expects electronics exports to drop by 18%, worse than its earlier expectation of a 5% decline.
SEIPI started out with an outlook of 8-12% growth for 2011 electronics exports.
“Although there has been an increase on consumer spending on technology products, it is the contrary to industrial spending, meaning, companies are not buying or upgrading technology,” SEIPI President Ernesto B. Santiago said in a text message.
Electronic products, which accounted for 51.2% of total export revenues during the month, posted a 30.6% decline to $2.07 billion. Compared with July, it contracted by 8%.
University of the Philippines economist Benjamin E. Diokno called the exports situation “hopeless” and called on industries to shift their focus to next year. Even 5% growth this year won’t be possible, he said.
“The exports growth trajectory is awful -- it has been on a free fall since September last year ... [hitting] 5% this year implies that exports will have to zoom up by 13.7% in the last four months of the year,” he said in an e-mail.
“For electronics exports, the sector’s big winner in past years, to be flat in 2010, it has to engineer a miraculous growth of 31.0% in the last four months of the year. Both events are virtually impossible,” Mr. Diokno added.
Sergio R. Ortiz-Luis, Jr., head of the Philippine Exporters Confederation, Inc. and EDC vice-chairman, said he still believed in exports growth of 3-5% for this year. He admitted, however, that an initial view that other products would make up for electronics was not holding up.
“At first we thought we have other merchandise to cover electronics but apparently none sufficed. We were hoping apparel would somehow save exports but it didn’t,” he said in a telephone interview.
Articles of apparel and clothing accessories, the country’s second-highest earner, declined 4.1% year-on-year to $173.44 million in August. Woodcraft and furniture -- ranked third in receipts with a 4% share of total exports -- gained 70.7% at $165.94 million.
“As I see it, [woodcraft] would also go down due to lack of supply [of raw materials],” said Antonio C. Olizon, president of the
Philippine Wood Producers Association, in a separate phone interview.
Economists said the downturn in exports would persist as US and European economies continued to weaken.
“I expect merchandise exports to continue to be weak until the year ends. Markets for our major exports are facing unstable economic conditions. In particular, the sluggishness of the US economy and Western Europe have contributed to the gloomy outlook for exports for the year,” University of Asia and the Pacific economist Cid L. Terosa said in an e-mail.
Mr. Diokno concurred. Citing August exports data by destination, he said: “The US and European markets were sharply down: -6.05% for the US, -31.67% for Netherlands and -40.77% for Germany. The grace are countries like Japan (20.8%) and China (24.2%).” -- Trisha P. Octaviano/Business World Online
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