Exports expand slightly in June

Exports managed to expand by one percent to $3.35 billion in June from $3.295 billion in the same period last year despite a drop in shipments of electronic products, the National Statistics Office (NSO) reported yesterday.

This was an improvement over the 0.9 percent export growth that was posted in May, the NSO said, updating an earlier report that exports rose by 1.1 percent in that month.

For the first six months of the year, merchandise exports were up 3.3 percent from a year earlier to $19.4 billion, the government statistics office said.

The government had forecast exports to rise by eight percent this year.

Analysts said the June export figures suggest that the government’s target of eight percent this year may not be attainable.

"The realistic target now is five to six which factors in expectations that the US economy will perform better in the second half," said Jonathan Ravelas, market strategist at Banco de Oro Universal Bank.

President Arroyo, who is facing calls for her impeachment, had been counting on exports, which account for two- thirds of the economy, to spur growth as consumer spending slowed in the first quarter and the nation attracted less foreign investment.

The International Monetary Fund (IMF) expects the economy to grow 4.75 percent this year, less than the government’s forecast for expansion of at least 5.3 percent and 6.1 percent in 2004.

"If the slowdown continues in July, then it will be a pretty grim scenario for the rest of the year,’’ said Sani Hamid, an analyst at Forecast Ltd. in Singapore, who expects exports to grow five percent this year, less than the government’s forecast of eight percent.

Electronics exports, which account for two-thirds of overseas sales from the Philippines, fell 4.7 percent to $2.2 billion.

Apparel and clothing accessories was the second top export sector, accounting for $187.8 million or 5.6 percent of total exports in June. This was a 6.1 percent drop over last year.

Other export sector like ignition wiring systems, petroleum products, coconut oil and copper cathodes all rose in June over the same period last year.

Shipments to Japan dropped 24.5 percent to $515.5 million. Sales to the US, the biggest buyer of Philippine exports, declined 1.2 percent to $569.6 million.

Consumer spending rose a seasonally adjusted 0.8 percent in the first quarter from the fourth, the smallest gain in three years, the government reported in May. Foreign direct investment fell 73 percent in the first quarter from Exports of petroleum products surged 87 percent to $50.12 million and shipments to China increased 79 percent to $372.6 million.

Sales to Korea rose 21 percent to $116.35 million, the report said.

The central bank in May cut its export growth forecast for this year to eight percent from 10 percent.

The Bangko Sentral ng Pilipinas (BSP) expects to achieve its export growth target because the US economy will keep expanding in the second half of the year, Deputy Governor Diwa Guinigundo said in a phone interview.

"The U.S. economy continues to show robust economic growth, so we can expect greater demand not only for computer parts but other electronic products,’’ Guinigundo said. "We should see a better exports picture this quarter.’’ – With reports from AFP