Neda: Prospects bleak for exporters

The threat of El Niño to the farm sector—coupled with low demand for locally produced goods from the country’s major markets—would make it difficult for exporters to prop up their earnings in the remaining months of 2015, the National Economic and Development Authority (Neda) said on Friday.

Data released by the Philippine Statistics Authority (PSA) showed that revenues from exports in
August declined by 6.3 percent to $5.12 billion, from $5.47 billion recorded a year ago. The Neda said the slowdown in August marked the fifth consecutive month of negative export growth this year.

“The latest export performance mirrors the recent developments in the global economy: the slowing down of global trade; sluggish momentum in industrial production in major economies; and downward price pressure on commodities,” Economic Planning Secretary Arsenio M. Balisacan said.

“With the absence of fresh triggers to spur renewed demand from major advanced economies, the exports sector is expected to remain constrained in the coming months,” Balisacan added.

The Neda said the double-digit contractions in shipments of manufactured goods and agro-based and mineral products caused export receipts in January to August to drop by 4.4 percent to $39.34 billion from $41.13 billion recorded a year ago.

In the month of August alone, manufactured goods accounted for 86.5 percent of the total export earnings. Revenues grew by only 0.4 percent to $4.44 billion from $4.42 billion recorded last year.

Data also showed that total agro-based products, with a share of 6.1 percent in August 2015, amounted to $314.85 million. It dropped by 37.4 percent from $503.3 million in August 2014.

The Neda added that this was the steepest decline and seventh consecutive month of lower earnings posted by the sector. This was due to lower receipts from coconut products, fruits and vegetables, sugar products and other agro-based products.

“The exports sector remains constrained by sluggish global demand, low oil prices and, most important, the threat of El Niño to the agriculture sector,” Balisacan said.

To address these issues, Balisacan urged policymakers to focus on enhancing and designing domestic policies that could mitigate the negative impact of external as well as domestic shocks, such as El Niño.

He again stressed the need to tap new markets, diversify export products, and invest in research and development to create product innovations that can boost the export sector’s competitiveness.

“This, however, must be coupled with the government’s effort to develop infrastructure, improve business regulations and logistics, and lessen foreign investment restrictions in the country,” Balisacan said.

Top buyers of Philippine products in August were Japan, which accounted for 20 percent of shipments, followed by the United States and China.

Exports to Japan amounted to $1.02 billion in August 2015. This is 1.6 percent lower than the $1.04 billion recorded a year ago.

Shipments to the US during the period were valued at $766.38 million, 4 percent lower than the $798.26 million recorded in August 2014. PSA data also showed that China’s purchases of Philippine-made products declined by 23.5 percent to $627.31 million in August from $820.04 million posted a year ago. –Cai Ordinario, Manila Times