PH exports surprise points to stronger growth
03/13/2012
MANILA, Philippines - Exports unexpectedly rose in January as demand from its major markets jumped, a positive start for the Southeast Asian economy after a disappointing 2011 and further evidence that global demand conditions could be improving.
Exports rose 3% in January from a year earlier, and the first rise since last April came as a surprise to a market looking for a fall similar to December's 18.9% drop.
Economists said the Bangko Sentral ng Pilipinas was now likely to hold the main interest rate at a record low after cutting it at the first two reviews of 2012.
"This unexpected recovery was likely largely due to the upside surprise in economic activity globally towards the end of 2011, especially in the U.S. and Japan, as well as relatively stabilisation of China's slowdown," HSBC economist Trinh Nguyen said.
Shipments to the country's three top markets -- Japan, the United States and China-- all grew by double-digits in annual terms in January after falls in December, although Europe remained weak.
Electronics, which make up more than half of total shipments, grew -- a modest 0.4% in annual terms, but the first rise in a year was welcome news particularly after five straight months where they had fallen between 29% and 48%.
HSBC's Nguyen estimated that electronic shipments rose 20.3% from December in seasonally adjusted terms.
Turnaround
"It seems to be supported by a major turnaround for electronics, which have borne the brunt of weak external demand, and regional supply chain disruptions," said ANZ economist Aninda Mitra.
"We also think this provides a firm basis for the BSP to remain on hold."
Ernie Santiago, head of the Semiconductors and Electronics Industries in the Philippines Inc (SEIPI) told Reuters the industry expected electronics exports to grow 10% to 15% in 2012 after contracting more than 20% last year.
Santiago said growth would be driven by businesses restocking and an expected increase in spending on technology.
Analysts agreed that the worst appeared to have passed for the electronics sector, and that should help lift economic growth towards the government's estimate of 5% to 6% for 2012 after a sharper-than-expected slowdown in 2011.
"This does look like a turnaround in the electronics cycle and suggests that GDP growth this year will accelerate from 3.7%," said Eugene Leow, economist at DBS in Singapore.
Exports account for about two-fifths of the country's GDP based on expenditure terms. The government has forecast exports to grow 10% this year, and it expects imports to climb 15%as manufacturers seek to shore up depleted inventories.
Investors seem confident the economy will strengthen -- the stock market is up 14% in 2012, and up by more than a third from Sep. 26, when it posted its lowest close for 2011.
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