The National Statistics Office (NSO) on Tuesday said export earnings in August declined to $4.053 billion from $4.774 billion in the same month last year. On a month-on-month basis, exports fell 8.5 percent from $4.429 billion in July.
Exports started posting year-on-year declines in April when they dropped 1.2 percent and have since continued to slide. However, they registered a double-digit growth in March with 12.6 percent.
“Time to hang up the gloves. Plan for next year. [The] trajectory [of exports] is awful—it’s been a free fall since September last year. Exports have to grow by 13.7 percent in the last four months of the year to meet the revised target of 5 percent. That’s virtually impossible,” former Budget Secretary Benjamin Diokno said in a statement.
Philippine Exporters Confederation President Sergio Ortiz-Luis acknowledged as much when he said even his downgraded growth forecast of 3 percent to 5 percent from the original 10-percent target may no longer be doable.
He said the year-to-date performance of the exports sector has shown how important the United States and European markets are for the country’s merchandise shipments.
“We cannot be saved by the Asian markets alone. The numbers are looking bad and I think even the 3-percent to 5-percent projection is now dim. The Asian market is okay but obviously we need the EU and the US because those markets are too important and big for us,” Ortiz-Luis told the BusinessMirror.
How the exporters would fare for the remainder of the year will now depend on how fast the crisis in the US and the EU would be resolved, he said
Compounding the poor performance in August, according to Ortiz-Luis, was the failure of other industries, such as garments and furniture, to offset the huge fall in electronics shipments.
“We expect these sectors to cover for electronics but they also dropped,” he said.
Shipments of electronic products, the country’s top export, fell 30.6 percent year-on-year to $2.074 billion. The NSO noted that it accounted for 51.2 percent of total merchandise exports.
Among the major groups of electronic products, components/devices (semiconductors), which accounted for 38.9 percent of total exports, declined 34.7 percent to $1.576 billion from $2.414 billion in August 2010
Diokno explained that while net exports—which is exports minus imports—does not have a significant contribution to economic growth, it would impact on employment for labor-intensive exports. If there is a slowdown or, in this case, a contraction in exports, there is a higher risk that joblessness will rise in the manufacturing industry.
And if there is an increase in joblessness, this will impact on consumer spending, which usually accounts for about 70 percent of the country’s gross domestic product (GDP).
For his part, economist Victor Abola of the University of Asia and the Pacific noted that the 30-percent drop in revenues from electronic products canceled out the 13-percent growth in nonelectronics exports.
Abola said the decline in electronic exports mirrored the 64.3-percent plunge in Singapore’s exports, which uses Philippine components and re-exports these products to China and India, where growth has also slowed.
Nonetheless, Abola said there might still be hope for electronic products by year-end. But this will only happen if there is some recovery in the demand for gadgets in East Asia and Southeast Asia.
National Economic and Development Authority Director General Cayetano W. Paderanga Jr. blamed the weakness in exports to low demand in the United States and Europe, the final destinations of the country’s electronic exports.
While Paderanga said the target of attaining an export growth of between 10 percent and 11 percent this year will be “very difficult” to achieve, he insisted that the government’s macroeconomic assumptions are still being reviewed and no change in the country’s targets have been made.
“We’re not writing off 2011. We just keep on working,” Paderanga said. “We are just trying to work on things that have developed already, of course it will be very difficult to do that [meet the targets].”
