November exports drop to 34-month low of $3.5B

The country’s export earnings tumbled 11.9 percent to $3.494 billion last November, the lowest level in 34 months, as the global economic crisis cut orders for Philippine shipments of electronics and other major products.

The National Statistics Office (NSO) said merchandise exports fell to $3.494 billion in November from $3.965 billion in November 2007.

For the January-November period last year, total exports amounted to $46.332 billion, up by a dismal 0.76 percent from $45.984 billion during the same period in 2007.

The government expects exports to grow by five to eight percent in 2008, but analysts said that with the downtrend in October and November expected to continue through December, exports may post a flat growth or even a full-year contraction.

“The November contraction was driven by continued drop in electronic shipments, though still better than expected and export to all major destination countries continued to plunge,” HSBC Senior Asia Economist Frederic Neumann said in a report on the country’s latest export performance.

Similarly, the Citigroup said: “The double digit export decline in November was better than expected but the update confirmed exports were less resilient to the global trade collapse in the fourth quarter of 2008.”

Neumann said that by country the picture remains worrisome, outbound shipments to the US, the country’s top export destination in November, were down 18.8 percent from a year ago level.

Despite the already dismal performance of the export sector in November, HSBC said the sector should brace for more difficult times.

“The Philippines still awaits the worst phase in exports given that earlier this month Taiwan has witnessed a severe collapse in December exports. That is likely to be a leading indicator of an imminent downturn for the Philippine exports,” Neumann said.

He noted that the global market for semiconductors is softening and most likely to enter its worst phase in the first quarter of 2009 amid an economic downturn.

“We expect gross domestic product growth to decelerate sharply, below 1.5 percent range in the first half of 2009. Lackluster export coupled with shrinking remittance flows should continue to weigh on the peso,” he added.

He expects the central bank to cut interest rates later this month because of the latest export figures.

At the same time, the export downturn also portends an uncertain job-scenario for increasing number of Filipinos, as the manufacturing sector will continue to shed jobs. This entails the need for the government to come up with more stimulus packages with greater thrust on employment.

The Citigroup, for its part, said that with the latest export performance, the challenge to the government is “to create job opportunities that can soak up surplus labor created by export manufacturing firms and returning Filipino workers from abroad.”

Shipments of electronics products, which accounted for more than half of the country’s exports, contracted 17 percent in November from a year ago after falling 18.9 percent year-on-year in October.

The electronics sector was heavily hit by the global financial crisis, forcing several companies, such as Texas Instruments to cut its work force.

Texas Instruments has retrenched 392 employees from its Baguio plant although it would open another facility in Clark, Pampanga.

Data showed that exports of electronics fell 17 percent to $2.017 billion in November from $2.429 billion a year ago.

Apparel and clothing accessories remained the country’s second top earner in November 2008 with a combined share of 3.8 percent and an aggregate receipt of $133.26 million or 15.8 percent lower than the $158.28 million in November 2007.

Top agricultural exports such as coconut oil and fresh bananas were down 27.7 percent and 15.9 percent, respectively.

This was partially offset by a 48.4 percent increase in shipments of ignition wiring sets, amounting to $108.05 million in November. Exports of woodcrafts and furniture also grew 14 percent to $99.21 million.

Copper metal exports went down by 19.7 percent to $78.35 million.

Other top exports in November were coconut oil valued at $48.26 million; metal components, $44.68 million; tuna, $40.23 million; and bananas, $32.74 million.

By commodity group, exports of manufactured goods were down 9.2 percent to $3.033 billion in November while shipments of agricultural products slipped 9.1 percent to $187.71 million.

Earnings from shipments of mineral products fell 39.7 percent to $128.35 million.

The United States remained the top market of the country for November 2008 with export receipts of $608.70 million, accounting for 17.4 percent of the country’s aggregate income for the month, down by 18.8 percent from $749.76 million recorded a year earlier.

Japan followed as the second top market of the country for November 2008 with export earnings of $572.65 million or 16.4 percent share of the total exports, lower by 3.8 percent from $595.03 million in November 2007.

Other top markets include Hong Kong, $477.79 million; People’s Republic of China, $318.66; Netherlands, $242.78 million; Germany, $181.65 million; Taiwan, $143.01 million;, Singapore, $134.33 million; Republic of Korea, $133.64 million; and Malaysia, $115.28 million.

Total export receipts from the country’s top 10 markets for the month of November 2008 amounted to $2.928 billion or 83.8 percent of the total.–Iris Gonzales, Philippine Star