Exports fell for the seventh straight month, as garments, agriculture, mineral and petroleum sales posted double-digit decline from a year ago, data from Philippine Statistics Authority show.
The PSA said exports dropped 10.8 percent to a six-month low of $4.59 billion in October from $5.14 billion a year earlier. The October exports were also down from $4.94 billion in September.
This brought total exports in the first 10 months to $48.9 billion, down by 6.2 percent from $52.1 billion recorded in the same period last year.
“The lingering sluggish global demand, as well as the slack in industrial activity in the United States and the recent economic adjustments in China, brought down the country’s exports. Exports performance in the succeeding months is also anticipated to remain weak given the slowdown in economic growth of the country’s major trading partners,” said Economic Planning Secretary Arsenio Balisacan.
Barclays, an international bank, said the October exports came weaker than the expected 3-percent contraction for the month.
“The contraction in exports eased from the revised 15.5-percent drop in September from the original -24.7 percent. A relatively low base provided some support in October,” the bank said in a report.
Barclays said the “soft exports and weak momentum are consistent with the recent deterioration in the US ISM [Institute for Supply Management] new orders, which dipped to its lowest level since 2012, indicating that external demand remains sluggish.”
“In the absence of a meaningful pickup in external demand, exports are likely to remain subdued, in our view,” the bank said.
The fragile global economy led to lower demand for the country’s agricultural, mineral and petroleum products.
Data showed that outbound shipments of minerals dropped 56.1 percent in October to $150.9 billion from $376.62 million in the same month last year. This is due to lower earnings from copper metal, copper concentrates and other mineral products.
“The lower volume of export of mineral products reflects the continued decline in the prices of metal commodities in the global market. International prices of iron ore and copper, which are the country’s two top minerals exports, declined significantly, resulting in lower revenue,” said Balisacan.
Agriculture exports tumbled 29.8 percent to $264.50 million from $376.62 million while petroleum sales contracted 57.9 percent to $22.87 million from $54.37 million.
Garments exports went down by 53.6 percent in October to $70 million from $151 million.
Meanwhile, electronics exports, which accounted for 52 percent of total exports in October, increased 7.3 percent to $2.38 billion from $2.22 billion a year ago. Shipments of woodcrafts and furniture posted the biggest growth of 43 percent to $284 million from $199 million.
The sluggish exports this year resulted in a wide trade deficit that reached $5.6 billion in the first nine months.
Exports to Japan, the top market, fell 7.7 percent to $1.036 billion in October while shipments to the United States dropped 13.1 percent to $675.35 million.
Sales to Hong Kong went down by 4.3 percent to $497.71 million while exports to China retreated 32 percent to $426.88 million.
“As the global economy remains fragile, export-oriented firms in the Philippines should recalibrate its production and marketing processes to serve the domestic market instead to facilitate this,” Balisacan said.
He stressed the need to collaborate with the private sector in order to facilitate marketing export products to the domestic market.
“However, we remain positive as substantial improvement in Japan’s industrial sector may partially offset the downward pull from weakness in US and China in the coming months. There is strong international demand for Japanese products and this will be a major factor in sustaining robust industrial growth,” he said.
Balisacan underscored the need to tap the potential of the services sector specifically tourism, indicating an expected surge of demand for services related to recreation and travel.
“Several manufacturing firms are also considering relocating to emerging economies. The country should thus take advantage of this opportunity by improving its competitiveness as an investment destination,” he said.