Exports seen to ease toward end of the year

MANILA, Philippines - Despite a jump in August, merchandise exports are forecast to ease toward year end amid continued weak demand from markets abroad, the research arm of Metropolitan Bank & Trust Co. (Metrobank) said.

“Exports are likely to continue easing towards the end of the year as global prices continue to be muted,” Mabellene Reynaldo, research analyst at Metrobank, said in the latest Weekly Views from the Metro report.

“Despite the rebound (in August), export performance is still a long way from a definite recovery given weak external demand outlook from the countryís top export items,” she noted.

Outbound shipments surged 20.2 percent to $4.581 billion in August, the highest growth rate seen since September last year. The expansion also came as a surprise following the lackluster performance of Philippine exports since January.

Reynaldo pointed out the level of growth in merchandise exports in August was basically due to a low base in the same month last year, when an 8.7-percent contraction was recorded.

“The high growth for the month was primarily driven by base effects, with the level last year being the second lowest in 2012 at $3.8 billion,” she said.

At the same time, she said an increase in demand for minerals and fuels helped increase exports as a rise in banana shipments also contributed to the hike in August.

“Minerals and fuels drove the upswing due to high import demand from China,” Reynaldo said.

“Banana exports growth more than doubled, as production improved and base effect since substantial quantity were barred from entering key markets due to quality issues at this time last year,” she added.

In the eight months to August, merchandise exports fell 0.8 percent to $35.003 billion from the same period last year.

Reynaldo noted electronic products, specifically components and devices, will continue to be a drag on the country’s merchandise exports.

The Semiconductor and Electronic Industries in the Philippines Inc. (SEIPI) last week said electronic shipments, which make up bulk of the country’s exports, are expected to decline by 10 to 12 percent this year as prices continue to fall.

“Uneven global growth prospects continue to constrain export values,” Reynaldo stressed.

“It is likely that the government export target of 10 percent will be missed this 2013 due to the downside in electronic exports despite the solid growth in other leading items,” added.