Exports recovery to come only by 2011, says industrialist

A YEAR’S holding of breath is expected by exporters before the sector reaches its precrisis levels, industrialist Sergio Luiz Ortiz Jr. said.

“Exports will go down by 10 percent this year, so a recovery of 10 percent to 20 percent next year will not be enough for us to go back to the precrisis levels; to recover what we had in 2007. We have to wait by 2011,” Ortiz, Philippine Exporters Confederation Inc. (Philexport) president, told reporters on Monday.

Ortiz said the figures he quoted are generous since these include merchandise and services exports, which two years ago were at a high of 40 percent.

“That’s assuming we’ve gone through the worse,” he said.

According to government statisticians, total exports continued to plummet by 13.7 percent in the third quarter of this year from a growth of 3.3 percent last year, “as both merchandise and nonmerchandise exports declined.”

“The country’s total merchandise exports reversed its growth of 4.8 percent registered in 2008 to negative 14.6 percent,” a statement by the National Statistics Coordination Board said.

“Meanwhile, exports of nonfactor services sank deeper to 8.4 percent from negative 4.3 percent recorded last year.”

Ortiz blamed the strengthening of the peso to the greenback as having sapped the strength of the recovery of the exports sector, particularly electronics.

“We were expecting a positive growth, but it [pace] was broken because of the exchange rate,” he said.

The peso, which closed at P47.2 on the last trading day of November, further flexed its muscle to P46.61 as of Friday last week.

Ortiz said that a P46.50-to-a-greenback exchange rate would already make exporters wince.

A further strengthening by 50 cents would spell losses for many of them, he said. “At P46, they will already incur losses,” he said.

According to Ortiz, the current rate further dampened the appetite of most exporters, citing the furniture segment’s shift to the local market led those in this export business to survive.

However, home furnishings only make up a percent of the country’s total exports, lorded over by electronics and electronics-related services, which has a 63-percent share of the industry.

Hence, Ortiz said the clincher for next year’s growth target by Philippine Chamber of Commerce and Industry of a 10-percent growth will rely on the electronics exports and the exchange rate.

“Growth will not persist next year if the electronics sector fails to deliver.”

The Semiconductor and Electronics Industries in the Philippines Inc. forecast a negative 20-percent to negative 30-percent drop in the electronics sector for this year.

The 38-year-old electronics industry of the country has experienced three down years: in 1985 by -9.77 percent, in 2001 by -14.81 percent and in 2008 by -5 percent, according to a presentation in April by Seipi executive director Ernesto Santiago.

Still, Ortiz said his group expects the pace of exports growth to pick up again, posting an estimated 10 percent, by the first quarter of next year if the exchange rate remains steady.

He said he believes monetary authorities will also not allow the peso to drop further as this will impact on inflation.

Ortiz said his group expects growth to come from the mining sector, especially for jewelry exports, and the gaming and tourism segments. –Dennis D. Estopace / Reporter, Businessmirror