Economic managers eye export slowdown

PHILIPPINE economic managers expect exports next year to slow down because of a strong peso and weakening demand from the country’s major markets. “Exports is one of the things that we are trying to review and try to see on how to fix it, because as you know the prospects of the currency is that it will be stable rather than depreciating, which is good,” Socioeconomic Planning Secretary Cayetano Paderanga told reporters.

He said the peso is likely to stay where it is right now “at least the early part going to the first half of 2011.”

At present, the foreign exchange rate stood at P44 against the US dollar. ”All of the exporters are experiencing the weakening of the dollar [which] also shows that our traditional market [US and Europe] are also not robust as [they] used to be,” Paderanga said.

He said growth next year may still come in at double digits, but lower than this year’s 15 percent target.

The Bangko Sentral ng Pilipinas, which earlier forecast a 10 percent growth for next year, said the number is subject to another review before the end of the year, with the likelihood of a downward revision.

“We will have to review our forecast given what is happening in the global economy. There is a continued weakness in global economic activity and this could influence our exports,” BSP Deputy Governor Diwa Guinigundo said.

He said the expected slowdown would also stem from base effects given the abnormally high growth this year.

But “what we are concerned about is really the market,” Paderanga said, adding that the government is hopeful that growth will come from the country’s new markets.

”There’s an increasing trade with Asian rim. That’s been noticed in the past few years,” he said.
Merchandise exports to East Asia in October accounted for 41.4 percent of the total, while shipments to Asean member-countries represented 25.8 percent.

Sales to the European Union and the US accounted for 11 percent and 14.7 percent, respectively. Data from the National Statistics Office showed that export revenues grew by 37 percent to $43 billion in the first 10 months this year.

The expansion was led by the electronics sector, demand for which recovered this year following a steep slowdown in 2009.

Economists said that in times of crisis, consumers skip buying goods considered as non-essential like electronics, but these products were one of the most attractive for consumers in times of recovery.

This year’s recovery of the Philippine export sector, whose earnings declined more than 20 percent in 2009, came as the global economy rebounded from a recession last year.

Robust export earnings this year also helped accelerate overall growth of the Philippine economy, which grew 7.5 percent in the first three quarters of 2010, much faster than the 1.1 percent for the whole of 2009.

In a research note, Metropolitan Bank and Trust Co. said the growth of the global economy in 2011 hinges on what transpired this year.

Analysts have been saying that the still high unemployment rates, deflation fears and a ballooning deficit all weighed heavily on the US economy. In a bid to avert the feared recession, the Federal Reserve maintained a loose monetary policy and effected quantitative easing eve as Washington extended tax breaks.

On top of that, the sovereign debt problems of euro zone economies have dampened economic prospects in the region. The dilemma highlighted the region’s structural weakness, especially the flaws of its integrated banking system, analysts said. –DARWIN G. AMOJELAR SENIOR REPORTER wITH LAILANY P. GOMEZ, Manila Times