Electronics seen to sustain export growth

MANILA, Philippines — The electronics sector, the country’s top exporter, is expected to sustain its growth momentum until next year even with global trade bottlenecks as economies recover.

In its weekly economic preview, market intelligence firm IHS Markit said global demand for electronic products continues to witness strong rebound following a slump last year.

The Philippines is expected to benefit from such recovery as electronics is the country’s top export, accounting for almost 60 percent of total.

Latest data showed that total exports for August went up as electronic products registered an 18 percent increase to $3.69 billion, as the easing of restrictions boosts business activities, thus contributing to more exports.

“With economic recovery continuing in the US and Europe as COVID-19 vaccines are progressively rolled out, demand for electronics products is expected to remain strong during the remainder of 2021 and into early 2022,” IHS Markit Asia Pacific chief economist Rajiv Biswas said.

The region’s electronic production is just starting to bounce back from last year’s trade disruptions and weak demand following lockdowns due to the pandemic.

The electronics manufacturing industry is an important part of the manufacturing export sector for many Asian economies, including South Korea, mainland China, Japan, Malaysia, Singapore, Philippines, Taiwan, Thailand and Vietnam.

Biswas said the pandemic has been accelerating the pace of digital transformation due to the global shift to working remotely, which in turn boosts demand for electronic devices such as computers, printers and mobile phones.

“The easing of lockdowns in many countries has also triggered a rebound in consumer spending, helping to boost demand for a wide range of consumer electronics,” Biswas said.

On the other hand, the sudden spike in demand has resulted in the rise of raw materials input prices for electronics firms coupled with higher shipping fees.

With shortages of semiconductors disrupting manufacturing supply chains, Biswas emphasized the importance of having domestic electronics production capacity for critical electronics components for major industrial nations.

“A key risk is excessive global vulnerability to semiconductor supply from South Korea and Taiwan, which are major electronics production hubs but also potential geopolitical flash points in the Asia-Pacific region,” Biswas said.

“Military tensions in the Taiwan Strait and West Philippine Sea have escalated during 2021, highlighting these vulnerabilities,” he said.

Nonetheless, IHS Markit noted that the medium-term economic outlook is still supportive for the electronics industry, with a sustained strong world economic growth forecast over 2022 until 2024.