Exports rebound after 17 months of slump

By Riza Lozada

After a long period of stagnation, ex­ports recovered in September as they posted a 5.1-percent growth to end 17 months of consecutive contractions going back to June 2015.

Economic officials said prospects for trade had brightened as a result of the successful state visits of President Duterte to Japan and China, the main ex­ports markets of the country.

The last time exports figures showed growth was in May last year when a 3.1-percent increase in re­ceipts was posted, com­pared with the previous year.

The growth of exports was due to upticks in all com­modity groups, except forest products, according to the National Economic and De­velopment Authority (Neda).

“Exports of manufactured products may continue to firm up in the near term, possibly riding on the growth of the global industry sector, ” So­cioeconomic Planning Secre­tary and Neda Director-Gen­eral Ernesto Pernia said. Exports for September rose to $5.2 billion as rev­enues from manufactures (4.8 percent), agro-based (24 percent), petroleum (71.7 percent), and mineral prod­ucts (4.7 percent) record­ed year-on-year expansions.

Most Asian countries also posted positive gains in exports for September 2016, pointing to a recovery in global trade.

“Recent developments in China and Japan, which are the Philippines’s largest trad­ing partners in Asia, provide good prospects for m erchan­dise trade.

The steady growth of China’s economy is a wel­come development, and the Japanese government also ap­pears to be on track in reviv­ing its economy,” Pernia said.

Pernia also said that aside from lifting the ban on bananas, China has also an­nounced its intention to buy more high-value commer­cial crops from the Philip­pines, such as mangoes and coconut, as well as high-end fishery products such as lapu-lapu, crabs and tuna.

Total merchandise trade grew by 9.8 percent in September 2016, pulled by the recovery of exports growth to positive territo­ry, Neda said in a statement. Based on a report by the Philippines Statistics Author­ity, total trade grew to $12.3 billion in September 2016, from $11.8 billion in August 2016.

Imports grew by 13.5 per­cent.

Meanwhile, the dou­ble-digit growth of merchan­dise imports in August 2016 can be attributed to hefty in­creases in capital goods, which grew by 15.8 percent, and consumer goods, which grew by 47.7 percent. Payments for merchandise imports reached $7.1 billion.

Pernia added that ex­pected upticks in prices of petroleum crude might push up Philippines import pay­ments in the near- to medi­um-term. The strong outlook of the domestic economy is also seen to prop up pur­chases of imported goods.

“Amid these mixed de­velopments and with risks mostly on the downside, the Philippines will continue to focus on bringing Phil­ippines exports to more di­verse markets,” Pernia said.

“Along with our improved bilateral relations with China, the country will correspond­ingly maximize opportuni­ties from existing free -rade deals, most notably the re­cently signed Philippines-Eu­ropean Free Trade Associa­tion agreement,” he added.

Pernia added that the manufacturing sector con­tinued to grow in Septem­ber due to sustained increase in capital goods produc­tion leaned on strong do­mestic demand and stable macroeconomic policies.

“This is a sign that our domestic economy is ro­bust and resilient, despite the slow global econom­ic recovery,” Pernia added. In the Philippines Sta­tistics Authority’s Monthly Integrated Survey of Select­ed Industries for September 2016, the Volume of Produc­tion Index (VoPI) grew by 9.9 percent, pushing the three-month moving average to 11.6 percent. This is a leap from the 3.0 percent registered growth in September 2015.

“This signals the man­ufacturing sector’s recov­ery and expansion from its weak performance last year,” said Pernia. Similarly, the Value of Production Index (VaPI) grew by 5.4 percent, a com­plete reversal from its 5.4 decrease in September 2015.

“We expect the sector to remain on its upward trajecto­ry during the coming months, as firms anticipate the in­crease in demand during the approaching holiday sea­son,” the Cabinet official said.

For capital goods, dou­ble-digit growth rates were posted by basic metals (41.percent), machinery except electrical (35.0 percent), and transport equipment (22.3 percent) in September 2016.

“This was backed by the increasing demand for con­struction-related materials, strong consumer confidence, and high importation of raw materials,” said Pernia.

Meanwhile, the average capacity utilization inched to 83.6 percent, with basic metals having the highest utilization rate at 88.5 per­cent followed by petroleum products at 88.4 percent. “While this growth is a boon, it is important to note that the average capacity utili­zation of manufacturing firms barely moved since 2012.

This may hamper the sec­tor’s growth in the long run as it may end up struggling to keep up with the increasing domestic demand,” he said.

Thus, Pernia stressed that the country must foster a cul­ture of innovation, research and development to boost productivity and remain com­petitive in an increasingly integrated global economy.

“We must ramp up our efforts in providing the econ­omy’s infrastructure needs, particularly for the manufac­turing and power sectors, to facilitate the smooth move­ment of goods and services and attract local and foreign investments,” he said.