Exports lose steam as factory output growth slows
Exports rose at the slowest pace in six months, as imports fell and the growth in local production decelerated in June, data from the Philippine Statistics Office show.
Merchandise exports grew 0.8 percent in June to $4.91 billion from $4.87 billion in the same month last year, while imports shrank 2.5 percent to $7.06 billion from $7.24 billion. Despite the decline in imports, the country still incurred a trade deficit of $2.15 billion during the month.
Economic Planning Secretary Ernesto Pernia said tapping new markets for Philippine exports would be necessary to improve trade in the coming months.
“We expect Philippine trade to recover, as the global economic recovery is seen to be on firmer footing in the second half of the year,” Pernia said.
He said the country could take advantage of its EU-Generalized System of Preferences Plus preferential status. He also recommended that the Trade Department continue its information sessions on “Doing Business with the EU using the GSP+” in key cities and towns in the country.
“This will help businesses to comply with the requirements, such as rules of origin and hurdle trade barriers, such as product standards,” Pernia said.
Data showed that despite the weak figures in June, total merchandise trade grew 11.2 percent in the first six months. Exports climbed 13.6 percent in the six-month period to $31 billion from $27.3 billion a year ago, while imports rose 9.6 percent to $44.2 billion from $40.3 billion. Trade deficit widened to $13.2 billion from $13 billion a year earlier.
Meanwhile, factory production grew slower in June from the previous year. Data showed the volume of production index grew 8.1 percent in June, slower than the 9.8-percent rise in the same month last year.
Pernia said the factory output expansion in the first half was supported by increased production of food, basic metals, transport equipment, fabricated metal products, non-metallic mineral products and export-oriented products.
Pernia said he remained optimistic of the manufacturing sector’s outlook, saying growth was expected to be sustained into the second semester.
“Looking ahead, the outlook for the manufacturing sector remains optimistic on the back of favorable domestic conditions such as stable inflation rate, robust economic demand, increased investments, and business confidence,” he said.
He cautioned against possible domestic and external risks to growth. “We need to be ready for possible disturbances in business activities during the rainy season. External risks, on the other hand, include the planned interest rate hikes of the United States and the inward-looking trade policies of major economies,” Pernia said.