MANILA: Growth in Philippine exports fell in November, dragging the value of shipments to a near two-year low as global demand sputtered, putting more pressure on the central bank to cut rates to support the domestic economy.
The Southeast Asian country's total overseas shipments dropped an annual 19.4 percent in November, the seventh straight month of declines, as semiconductors and electronics exports fell 34.5 percent, the National Statistics Office said on Tuesday.
That brought total exports to $3.34 billion, the lowest value since December 2009. This, combined with the fact that inflation was at its slowest in 11 months in December, strengthens the case for BSP, the central bank, to ease policy.
"It is probably even more compelling for them to cut rates now, especially since inflation has opened the door for a downward adjustment," said Jun Neri, economist at Bank of the Philippine Islands.
"Clearly, it (exports) is going to be a drag to the fourth quarter performance, and the likelihood of meeting even the low end of the full-year (growth) target range is in danger of being missed," he said.
Analysts expect total rate cuts of 50 basis points in the first half, with some predicting a cut as early as the next policy meeting on Jan. 19, to boost growth.
The electronics industry is hoping an expected economic recovery in the United States later this year may spur a rebound in export demand.
The sector accounts for about three-fifths of Manila's overall shipments. Exports account for about a fifth of the country's gross domestic product.
DEMAND SHIFTS
But the local industry may have been slow in adjusting to changing consumer preferences given the shift to tablet PCs that use less chips and components that Manila produces, said George Worthington, Asia-Pacific chief economist at IFR Markets, a Thomson Reuters company.
"Up until recently, strength in shipments of other, more traditional exports such as wood products has masked the extent of the problem for exports in general," he said.
"But the lack of growth in November raises fears of a severe worsening in the trade deficit - already at a 14-year high of $10.8 billion in October - into 2012," Worthington said.
The country's main electronics industry group said on Monday shipments of electronics and semiconductors in 2011 may have contracted more than 20 percent from 2010, worse than the 18 percent fall predicted in October.
Electronics exports in January to November fell almost 23 percent from a year earlier to $22.2 billion.
But the industry group said a turnaround in shipments was likely this year, especially in the second half, with an expected rebound in consumer and industrial spending on technology ahead of the US presidential elections in November.
The United States is the Philippines' second biggest export market after Japan, accounting for 15 percent of total shipments. Japan has a 21.6 percent share.
By economic bloc, Eastern Asia is the country's top export destination, making up 52 percent of total shipments.
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