Philippine exports at lowest in 3 years, govt spending to support economy

[MANILA] Philippine exports in January slipped to their lowest in three years on weak demand in key markets such as China, a trend that could persist in the near term though a bump-up in government spending is seen supporting one of Asia's fastest growing economies.

Shipments fell to US$4.19 billion in January - the lowest value since February 2013 - from US$4.36 billion in the same period last year, despite a 5 per cent rise in electronics shipments, the statistics agency said on Thursday.

Other key exports all declined, including machinery and transport equipment, apparel and clothing accessories.

"If you look at the performance of non-electronics export, that has been fairly weak for quite some time and we think for the first half this year, it is unlikely we are going to see any major improvement coming from the exports front," said Rahul Bajoria, economist at Barclays in Singapore.

All the same, the Philippine economy is unlikely to slow sharply as some of its neighbours as higher government investment on infrastructure and a burst of campaign spending ahead of the election of a new leader on May 9 should support growth.

"Underlying growth will remain supported by infrastructure project spending and we do think consumption demand will remain fairly strong," Mr Bajoria said.

The Philippine economy grew 5.8 per cent in 2015, one of the strongest expansions in the world amid a turbulent year for markets as a slowdown in China, tumbling oil and other commodities stoked deflationary pressures and prompted a wave of global policy easings.

The government is targeting growth of 6.8-7.8 per cent this year, down from an earlier goal of 7-8 per cent, reflecting the downturn in the global economy. But that is still faster than the 6.0 per cent growth forecast pencilled in by the International Monetary Fund last month.

The latest data showed that while electronics shipments, which remained the country's top export, rose for the fourth month in a row in January, the rate of increase slowed for a second straight month.

Shipments to China, the fourth biggest market for the Southeast Asian country and one of the top destinations particularly for local minerals, slipped 8.6 per cent from last year while exports to the United States, the No. 2 market, were up only 0.7 per cent.

Exports to top market Japan increased 7.7 per cent while shipments to third biggest market Hong Kong grew 2.6 per cent.

REUTERS