Export earnings fall this year

According to the Institute for Development and Econometric Analysis, Inc. (IDEA) latest Newsbriefs, a weekly digest produced by IDEA, Inc. to highlight the most recent national and international economic events, export earnings fell on an annual and monthly basis for April 2013 according to the Merchandise Export Performance report release by the National Statistics Office this week. Export earnings amounted to $4.04 billion, falling by 12.8 percent from last year’s $4.635 billion earnings. On a monthly basis, earnings also decreased by 6.7 percent from $4.329 billion reported in March 2013.

According to the NSO, the fall can be attributed to changes in chemicals, other manufactures, machinery and transport equipment, electronic equipment and parts, metal components and electronic products. Electronic products fell by 0.4 percent while earning from semiconductor products increased by 10.6 percent. Although the semiconductor industry tempered the decline in export earnings, economists believe that recovery of the semiconductor industry is on the way and emphasizes structural problems in the electronics industry as source of the decline. They also identified weak trading links between the Philippines’ major trading partners, US, Japan and Europe as the source of the underperformance of Philippine exports.

Likewise, per same published report the Philippine Stock Exchange index (PSEi) plunged earlier this week by 442.57 points, closing at 6,114.08. According to BusinessWorld, this dip was the sharpest since the 12 percent fall in the main index last October 2008. The decline was attributed to the financial markets’ response to the change in fears in the scaled-down stimulus by the Fed and Bank of Japan’s decision to keep monetary policy steady. PSEi rebounded later this week, gaining 3.10 percent or189.49 points.

Furthermore per IDEA, the Peso fell this week, plunging at P43.20 per dollar, the lowest value since last year. Bangko Sentral ng Pilipinas (BSP) Governor Amado Tetangco identified good news about Japan’s exports and increase in US employment as the source of the fall, causing investors to move their portfolios away from emerging markets. Traders took advantage of the dip. BSP on the other hand, reiterated that the fall is not surprising and said that it will continue to monitor the country’s exchange rate. Moreover, BSP kept interest rates on Special Deposit Accounts (SDA) unchanged between 3.5 to 5.5 percent. Much focus was given to SDA rates as it is expected to encourage productive investment while reducing opportunistic ones. BSP also told trust entities to remove fiduciary and investment management accounts from the SDA to encourage consumption and investment.

However on the other hand, unemployment rate climbed to 7.5 percent this April from 7.1 last January, with underemployment rate increasing at 19.2 percent. President Aquino attributed the increase to problems of the farming sector and highlighted improvements in the industry and service sectors. However, economists questioned the inclusiveness of Philippine growth, as the 7.8 percent growth in GDP for the first quarter translated to a loss of jobs, particularly in the agricultural sector which employs many Filipinos, according to IDEA.

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