The National Statistics Office (NSO) reported yesterday that imports rose 6.3 percent to $2.994 billion in February, down from a nine percent rise a month ago but still suggesting that the economy was drawing in more goods to feed its export industries.
"We find good reason to be optimistic on our outlook in all levels of the electronics supply chain. This also means that economic activities in the country have increased and that our fundamentals remain sound. It also signals a good start for higher production in the manufacturing sector," Trade Secretary Cesar Purisima said yesterday.
February exports were 7.5 percent higher than a year earlier at $2.999 billion, the government statistics office announced earlier this month.
Analysts said political uncertainty ahead of May 10 national elections was probably limiting the country’s ability to take advantage of rising global demand for electronics and fend off stiff competition from China.
"That may continue to have some impact," said Song Seng Wun, regional economist with GK Goh securities in Singapore.
"After that, we are hopeful that as long as underlying demand on the tech side remains firm, we will see an improvement in terms of imports of capital goods together with an improvement in raw material and intermediate goods."
Song noted that February’s 7.5 percent rise in capital goods imports had been the slowest in three months, possibly a result of weaker demand in the economy.
But imports of electronics parts were 17 percent higher than a year earlier at $1.495 billion and accounted for half of arriving goods and services.
"The February imports figure is indicating that stronger growth in previous months may have built up some inventories for the near term," said AB Capital economic analyst Jose Vistan.
"But the six percent year-on-year growth is still good news."
Exports picked up in February after a weak start in the first month of the year as demand for electronics climbed in line with the global economic recovery.
The local electronics industry assembles imported components into finished goods for export, so a rise in imports is often seen as a herald of brighter trade figures.
Electronics, which accounted for nearly 50 percent of the February import bill, rose 17 percent to $1.495 billion from $1.278 billion in the same period last year.
The DTI is the ASEAN champion for electronics, one of the priority sectors in the ASEAN initiatives to realize the vision of the ASEAN Economic Community by year 2020.
"This development also shows that there is a growing tendency towards product and business innovation in the electronics sector. The other thing is by infusing new investments and capital into this sector, we can expect more jobs created by the sector," Purisima said.
Imports of mineral fuels, lubricants and related materials ranked second with purchases worth $256.5 million.
Industrial machinery and equipment, the third top import, was worth $125 million, or a 12.6 percent increase from $111 million last year followed by iron and steel at $105.65 million.
Other top imports were: transport equipment, $83.36 million; plastics in primary and non-primary forms, $77.54 million; and telecommunication equipment, $73.5 million.
The Philippines is still falling short of its neighbors in terms of export performance. The 7.5 percent rise in the year to February compared with gains of 16.7 percent in Malaysia and 34.7 percent in Taiwan.
"With China continuing to be the alternative area for investment, particularly for electronics, that has been at the expense of the Philippines," said Song.