The Philippines outperformed its Asian neighbours, with July exports posting a 7.8 percent rise from a year earlier, though details suggest the country may struggle with continuing weakness in global demand.
Exports reached $4.81 billion from $4.46 billion a year earlier, following higher shipments of activated carbon, metal components, farm products and vehicle components, the National Statistics Office said Tuesday.
Exports in July rose 11.4 percent from a month earlier, when exports totalled $4.31 billion.
The Philippines was one of few Asian nations to post on-year export growth in July – others included Singapore and China – but the data hinted at tougher times ahead.
Shipments of electronic products, the Philippines’ main export item, fell 26 percent to $1.68 billion from $2.25 billion a year earlier. Electronics exports also declined 11 percent from June, when shipments reached $1.88 billion.
“While this upside surprise in exports is good news in the sense that it sets a higher base going into third quarter…we would not be surprised to see a correction in overall exports in coming months as global demand remains soft, as highlighted by the weakness in electronic exports,” said Santitarn Sathirathai, research analyst with Credit Suisse.
“As a result, we doubt exports can serve as the main engine for economic growth in third quarter,” he said.
Barclays Capital in a research note made a similar point: “It’s hard to say that the export momentum will continue…Although our base case remains for the global electronics cycle to improve in the fourth quarter of 2012, the continued uncertainty in Europe, weaker growth in China and easing global business confidence suggest that the turnaround in exports is likely to be weaker than we earlier expected.”
Still, Sathirathai argued that the July export growth, along with a recent spike in inflation, “set a higher hurdle for an additional rate cut.”
The central bank will hold a policy review meeting Thursday, and a Dow Jones Newswires poll of 13 economists showed 10 expect Bangko Sentral ng Pilipinas to stand pat on interest rates, which stand at 3.75 percent for borrowing and 5.75 percent for lending.
In the January-to-July period, exports totalled $31.56 billion, up 7.7 percent from $29.31 billion a year earlier.
Singapore was the Philippines’ largest export market in July, with shipments surging to $832 million, compared with $351 million a year earlier.
Japan was the second largest, with exports totalling $764 million, a 28 percent decline from a year earlier. The US came in third, with shipments valued at $668 million, a 2.5 percent rise from a year earlier.