The country’s imports sector, an important indicator of economic growth prospects, especially if it involves capital equipment, was seen growing at a markedly decelerated rate of only 6 percent this year from almost 27 percent in 2010, analysts at the Development Bank of Singapore (DBS) said.
The slowdown reflects just how deep trade activities among countries have been affected by the sovereign-debt issues in the euro-zone countries and economic uncertainties in advanced economies led by the United States.
According to DBS analysts, import growth in the Philippines in August alone should contract by about 1.4 percent.
“Currently, a 1.4-percent year-on-year contraction has been penciled in for August. For the full year, import growth was expected to be around 6 percent,” DBS reported in its latest readings involving countries within Asia.
According to the DBS analysts, the country’s external sector, which has been a net recipient of overseas investments in both direct, as well as portfolio terms thus far, “is not going to be able to provide a lift to the Philippine economy in the short term.”
In fact, DBS said it was not at all surprised that the Bangko Sentral ng Pilipinas (BSP) left the benchmark policy rate unchanged at 4.5 percent at the recent monetary policy meeting on October 20.
“Moreover, BSP also exhibited a dovish stance by revising down its inflation forecast for 2012 to 3 percent from 3.4 percent in September. This signals a readiness to ease monetary policy further in the coming months if needed,” the Singaporean lender said.
It also noted the North America semiconductor book-to-bill ratio, an indicator of whether demand for a given commodity was rising or falling, was still firmly below par and has yet to show any signs of a pickup.
“As such, raw material imports [the bulk of which are needed for the manufacturing of electronics goods] should continue to languish,” DBS said.
Last year total imports spared 26.9 percent to $54.702 billion from $43.092 billion in 2009.
The Cabinet-level Development Budget Coordination Committee also only recently cut the country’s anticipated growth in gross domestic product to a range of 4.5 percent to 5.5 percent, instead of the revised 5 percent to 6 percent on account of slower than expected economic growth in the first half of the year.
