Exports sank 24.7 percent in September from a year ago, the sharpest drop in four years, as the fragile global economy led to lower demand for the country’s manufactured, agricultural, mineral and petroleum products, data from the Philippine Statistics Authority show.
The latest figure will likely drag down gross domestic product growth in the third quarter, as imports continued to outpace exports, according to an economist.
Exports dropped to $4.4 billion in September from $5.8 billion a year ago. It was also lower than $5.1 billion registered in August.
This marked the sixth consecutive drop in exports this year, data showed. Exports in the first nine months declined 6.9 percent to $43.7 billion from $47 billion a year ago.
“This mirrors a still sluggish external demand due to weak global economic activity and depressed commodity prices, which continue to strain exports growth,” said Economic Planning Secretary Arsenio Balisacan.
Standard Chartered Bank economist Jeff Ng said the latest export figure was “surprising” following the strong imports growth in intermediate goods. “The result was surprising given strong import growth in intermediate goods. It could mean that domestic demand is strong,” Ng said.
Ng said the weak exports might drag down economic growth in the third quarter. The gross domestic product grew 5 percent in the first quarter and 5.6 percent in the second quarter, below the government’s target range of 7 percent to 8 percent for the year. The PSA is set to release the third-quarter growth figures in the last week of November.
“However net exports are likely to subtract from growth in third quarter. The weaker currency may help export growth going forward,” Ng said.
Balisacan said there were signs that exports would rebound in the fourth quarter.
“Signs of a possible rebound of the country’s merchandise exports in the fourth quarter are likely, owing to better prospects in Japan, US and the Eurozone,” he said.
Data showed that manufactured goods, which comprised about 87 percent of the country’s total merchandise exports, plummeted 23.6 percent to $3.8 billion from $5 billion in the same month last year.
“This reflects the still weak global manufacturing sector, which can be traced to the sluggish final demand and ongoing inventory adjustments,” Ng said.
Export earnings from agricultural shipments contracted 29 percent in September to $251.8 million from $354.7 million, on lower receipts of fruits and vegetables, coconut products, sugar products, and other agro products.
Sales of mineral products decreased year-on-year by 32.6 percent, while petroleum products declined 83.7 percent to $13.7 million from $83.8 million.
Exports of electronic products, which accounted for 54.3 percent of the total exports, went down by 2.1 percent to $2.393 billion from $2.443 billion in September 2014.
“The government needs to further strengthen its efforts to diversify export markets in order to dissipate the impact of weak demand from a relatively concentrated market. Tapping the opportunities from the export of services such as outsourcing can in part compensate for the decline in goods exports,” Balisacan said.
He said the country should maximize the potential of free trade agreements and execute programs to address bottlenecks that affect the competitiveness of the export sector.
“We need to explore the country’s inclusion in the Trans Pacific Partnership agreement, which can bring enormous benefits to participating countries in terms of trade,” said Balisacan.