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Philippine imports shrink the most since 2009 as global headwinds hit
[MANILA] Philippine imports dropped nearly 26 per cent in December, the sharpest fall since 2009, as semiconductor shipments contracted almost 40 per cent to signal tougher days ahead for one of Asia's fastest-growing economies.
The Philippines imports semiconductors largely for assembly in electronics products for export, and the decline underlines slower demand overseas as the global economy weakens.
Last week, Manila cut its 2016 import growth target to 10 per cent from 12 per cent and for export growth to 5 per cent from 6 per cent, citing a "very challenging" external environment.
Economists say the import data also highlights softening domestic demand, and growing uncertainty on the investment outlook ahead of national elections in May.
"Every time there is a presidential election, investment tends to slow significantly," said Natixis economist Trinh Nguyen, who said the market was looking for imports to have risen 10 per cent in December.
"I think a lot of private sector investment is holding back waiting for the (election) results - to have more certainty."
It was the first decline in Philippine imports since last May and the sharpest since August 2009 when imports fell 28.3 per cent, according to an official of the Philippine Statistics Authority. It was the steepest drop in imports for the month of December since 2008.
Imports of electronics, which accounted for nearly a third of total imports, fell 30.3 per cent from a year ago, also showing the first drop in seven months, government data on Wednesday showed.
Danilo Lachica, president of Semiconductor and Electronics Industries in the Philippines (Seipi), which groups more than 200 semiconductors and electronics manufacturers, did not immediately respond to a request for comment on the data.
Falling global commodity prices were also partly to blame for the drop in total imports, with mineral fuels, lubricants and related materials slipping 14.1 per cent.
Purchases of raw materials and intermediate goods dropped 53.2 per cent, suggesting "a bit of cautiousness overhanging the economy," said Mr Nguyen.
The surprise drop in imports came a day after the Philippine central bank painted an upbeat outlook for the domestic economy.
Bangko Sentral ng Pilipinas governor Amando Tetangco said on Tuesday that the economy should be resilient this year to both external and domestic risks, noting there was no need for additional economic stimulus at the moment.