Faster global growth, elections to hike imports by 10% in 2016

Election spending and the recovery of the global economy will increase the country’s import payments to at least 10 percent next year, according to the National Economic and Development Authority (Neda).

Economic Planning Secretary and Neda Director General Arsenio M. Balisacan said imports growth has already been showing encouraging signs that a double-digit hike for next year may be “imminent.”

“The continuing resurgence of imports is a healthy indication of robust investment demand, as it continues to be driven by intermediate and capital goods. The anticipated recovery of the global economy, and brisk election spending will con-tinue to drive imports to double-digit growth,” Balisacan said.

The Philippine Statistics Authority (PSA) said the growth rate of import payments in October reached 16.8 percent, the highest since July’s 23 percent.

Data also showed that the growth of the country’s import bill has not been in the negative territory since June.

According to PSA figures, import payments contracted in January, March, April and May. The biggest cut in the country’s import bill was registered in May at 13.4 percent.

Balisacan said payments for imported goods grew in October on the back of higher inward shipments of raw materials and intermediate goods which grew 40.1 percent, followed by capital goods at 25.4 percent, and consumer goods, 4.1 percent.

“Increasing appetite for capital goods and manufactured goods, such as materials accounting for the manufacture of electrical equipment, signifies an upbeat business sector,” Balisacan said.

Import payments for raw materials and intermediate goods reached $2.79 billion and accounted for 42.8 percent of the country’s total merchandise imports in October.

The value of imported capital goods, meanwhile, reached $2.11 billion in October. It accounted for 32.3 percent of total imports.

The Neda said imports of capital goods have been expanding at double-digit rates since March. Balisacan said this bodes well for overall investments growth in 2015.

PSA data showed that import payments for consumer goods increased to $1.1 billion, while total import payments for mineral fuels and lubricants declined by 38.5 percent to $524.8 million in October.

The Neda said the decline payments for imported mineral fuels and lubricants was mainly due to the volume purchases and price decline of petroleum crude.

“On the back of a weak global environment, the strong growth in shipments of capital goods and consumer goods points to a resilient domestic economy. Supportive policies for a thriving business sector should be continued,” Balisacan said.

“These include lowering the cost of and reducing the time for starting a business, reducing red tape and transaction costs, and supporting innovation and technological improvements, among others,” he added.

The country’s top 3 import sources in October was China, which cornered 17.2 percent of total import payments, followed by Japan and the US with a share of 11.2 percent and 10.7 percent, respectively.

Imports from China amounted to $1.12 billion in October. This represented an increase of 22.9 percent, from $913.36 million recorded a year ago.

The balance of trade in goods for the Philippines in October registered a deficit of $1.93 billion, higher than the $441.11 million trade deficit in October 2014.

Combined imports for January to October amounted to $56.52 billion, a 3.9-percent increase compared with $54.39 billion in the same period of last year.

Higher electronics exports

Better economic prospects for the country’s major export markets next year have also made the Philippine Exporters Confederation Inc. (Philexport) more optimistic. Philexport said the sector’s revenue could grow by 10 percent to $27.5 billion next year.

Francisco Ferrer, Philexport trustee representing the sector, said shipments in 2016 could increase on the back of the possible relocation of new electronics firms in the country, as well as sustained demand from overseas export markets.

He said the demand for hard disk drives for computers remains robust due to the relocation of at least 20 new Japanese electronics makers from China to the Philippines.

Ferrer said, however, that Philexport’s 10-percent forecast is based on the Philippine Economic Zone Authority’s standard 10-percent annual target on all exports.

The Semiconductor and Electronics Industries in the Philippines Inc. (Seipi) has yet to disclose its forecast for 2016. Seipi earlier said the sector’s revenue could post flat growth this year due to sluggish demand from major markets, such as China.

Data from the PSA showed that electronics accounted for 52 percent of total exports revenue in October. –Cai Ordinario, Businessmirror

(With Catherine N. Pillas)