Positive Economic Outlook for the Philippines as Exports and Imports See Strong Growth
The Philippines’ exports grew by 9.3 percent year-on-year to US$4.38 billion in January 2014, according to the latest figures released by the National Economic and Development Authority (NEDA). The ASEAN nation relies heavily in the electronics industry, which experienced strong export growth exceeding 20 percent, leading the list of exports and accounting for over 40 percent of total exports.
The industry group, the Semiconductor and Electronics Industries in the Philippines, Inc (SEIPI), has made a “very modest” projection of five percent growth in electronics exports this year as demand from the U.S., Europe and Japan recovers. The five percent forecast has been labelled a “conservative” estimate by Sergio R Ortiz-Luis, Jr, president of the Philippine Exporters Confederation, Inc, who expressed that it would be “easy” for the electronics industry to meet that projection.
Exports from other manufacturing totaled US$600.3 million, almost double the January 2013 figure of US$300.9 million. The rapid growth in this and the electronics sectors has offset, to an extent, shrinking exports of the nation’s other top commodities, such as agricultural, mineral and petroleum products.
The promising start to this year will be welcome news for exporters, especially after last year’s sluggish 3.6 percent growth as global demand, particularly from developed countries, slowed.
Similarly, imports which were affected by weakened demand for the country’s exports, contracted by 0.7 percent to US$61.7 billion last year.
So far, 2014 is looking much more optimistic. Imports grew to US$5.8 billion in January, up 21.8 percent from US$4.7 billion in the same month of 2013, reaching their highest level in nearly three years and far exceeding the projected increase of 8.5 percent. According to data from the National Statistics Office (NSO), this was the third month in a row which saw an increase.
Besides imports of construction materials (such as steel and other metals), for rebuilding in the wake of super-typhoon Haiyan, electronics imports are also on the rise. The import of electronics saw double-digit growth of 11.1 percent year-on-year to US$1.3 billion.
Much of the growth in electronics imports is driven by growth in exports, as imports of raw materials or other inputs are used in the production of exports. A high level of imports of raw materials or other inputs can be indicative of strengthening business confidence, and are likely to result in higher levels of exports in coming months.
“Imports are starting to catch up on the double-digit growth seen in exports, as it has been lagging for the most part of the second half last year,” Emilio S Neri, Jr, economist at the Bank of the Philippine Islands explained.
On Wednesday, the International Monetary Fund (IMF) revised its 2014 economic growth forecast for the Philippines to 6.5 percent, up from its earlier 6.3 percent forecast in January. The 6.5 percent estimate for 2014 is now within the government’s targeted 6.5 to 7.5 percent range.
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