Overseas dev't to continue posing risks to PHL exports – study

External headwinds continue to pose a threat to the country's exports industry, First Metro Investment Corporation (FMIC) and the University of Asia and the Pacific (UA&P) warned in a joint study released Tuesday.

“The political and economic turmoil in advanced economies may continue to challenge the Philippine export industry,” read FMIC and UA&P's recent “Market Call.”

In February, Philippine exports fell 15.6 percent year-on-year—the fastest pace in 14 months—to $3.74 billion.

According to the National Statistics Office (NSO), a 36.5-percent fall in electronic shipments —the country's top export products—to $1.48 billion caused the decline.

The February figure followed January's 2.7-percent drop in exports and 31.9-percent contraction in electronics shipments.

“The weak 0.4-percent expansion of the US economy in Q4 2012 as well as the issues on fiscal cliff and unabated job creation weakness in the US dampened their demand for raw electronics in January,” the report read.  

“In the same month, the dispute between Japan and China over the Senkaku Islands took a rising toll on their respective electronics industry as trade growth between the two countries fell significantly,” it added.  

However, FMIC and U&P said, “Positive news on the ensuing months...has caused demand for semiconductors to rise,” as suggested by the improvement in the book-to-bill ratio in these countries imply that orders may now be exceeding delivery.

Moreover, “Market Call” noted the resilience of other export products like metal, woodcraft and chemicals.

“It is too early to tell whether or not the export sector will be able to achieve the country’s 11-percent growth target for 2013. We just have to follow how the sector performs in the coming months,” the report read.

Last week, Socioeconomic Planning Secretary Arsenio Balisacan told reporters at the sidelines of a data release that “the government is aiming to diversify Philippine exports products, so to not be reliant on volatile electronics industry.”

Benign inflation

FMIC and UA&P, meanwhile, maintained that inflation will remain benign in the coming months.

The report noted that the rise in consumer prices may even settle below 3 percent  as “crude oil prices trend lower” and “second crop of rice harvest is quite promising.”

On Thursday, Bangko Sentral ng Pilipinas Deputy Governor Diwa Guinigundo announced that the Monetary Board cut the inflation forecast for this year on expectations of lower costs of crude in the world market.

The Bangko Sentral now forecasts 2013 inflation to settle at 3.2 percent, near the lower end of its 3- to 5-percent target. — BM, GMA News