PH exports lose steam as demand from key trading partners fall

The “fledgling” recovery of Philippine exports appeared to be losing momentum as global headwinds continued to hurt demand from major trading partners, an analyst said.

In an e-mailed commentary, Miguel Chanco, chief emerging Asia economist at Pantheon Macroeconomics, said the bigger month-on-month decline in export sales in October highlighted a delicate ascent that’s “losing steam” as appetite from key markets weakened, particularly in the US and China.

“It looks like the fledgling recovery in exports since they bottomed out in April is quickly losing steam at the margins,” Chanco said.

“Exports suffered a larger month-on-month decline at the start of fourth quarter, versus in September, due mainly to material drops in demand from the US and China,” he added.

October slump

Latest government data showed that exports had sagged 4.1 percent month-on-month in October, worse than the 0.6 percent contraction in September.

The decline was more pronounced on an annual basis. Exports plummeted 17.5 percent compared with a year ago to $6.36 billion in October, with outbound shipments to the US, the Philippines’ biggest export market, falling 13.5 percent while exports to China and Japan both tumbled by 9.7 percent.

Chanco explained that the large year-on-year drop in exports in October was not a cause of concern as the decline was magnified by base effects which, he said, “should unwind substantially and persistently from the November report to February next year.”

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Discounting 2023

Exports are one of the Philippines’ dollar engines but they are seen to become less reliable this year.

Based on latest forecasts, the Marcos administration projected that exports would contract 4 percent in 2023, before growing by 5 percent in 2024 on expectations of stronger demand for semiconductors.

Outbound shipments of goods are forecast to return to their prepandemic growth pace of 6 percent from 2025 until 2028 on anticipated increase in demand and trade activities here and abroad. INQ