WARNING FLAG UP: EXPORTS DOWN 3.2% IN MAY / APRIL INVESTMENTS DOWN 50%

MANILA, JULY 14, 2011 (MALAYA) BY ANGELA LORRAINE CELIS - MERCHANDISE exports declined 3.2 percent in May, the first contraction since the 6.06 percent drop in October 2009.

Data from the National Statistics office showed that export earnings for the month stood at $4.104 billion, against $4.241 billion in May last year.

Export revenues also fell 4.6 percent month on month from April’s $4.302 billion.

"Exports growth has been on a decline since September last year. The contraction was not a surprise," Benjamin Diokno, UP economist, said.

"The world economic recovery is weak and consumer demand remains tepid. I expect export growth to be negative up to September 2011," Diokno added.

The decline was mainly influenced by the contraction in export receipts from electronic products.

While electronic products remained as the country’s top export commodity, total receipts for May fell 26.2 percent to $1.886 billion, from $2.554 billion in May 2010.

Month on month, it also posted a decline of 3.7 percent from April $1.959 billion.

Semiconductors, in particular, posted a negative annual growth of 25.1 percent to $1.408 billion, from May 2010’s $1.878 billion.

"Demand for semiconductors is a derived demand. Weak demand for consumer durables is largely responsible for the contraction in electronic products," Diokno said.

"The fall in electronic products could be more serious than what it appears to be. Except for Apple products and other state-of-the-art electronic products, the industry as a whole is undergoing serious adjustment. Maybe... the Philippines may not be attuned to this changing demand pattern," Diokno added.

Woodcraft and furniture was the second top category of exports for the month, with a 98.1 percent increase in export receipts to $186.33 million, from $94.05 million last year.

Articles of apparel and clothing accessories came in third with $159.93 million. It posted a growth of 6 percent from the $150.95 million in May 2010.

Next was coconut oil, which expanded 9 percent to $119.99 million, from $110.13 million a year ago.

Petroleum products came in fifth, with the highest positive annual growth among the top 10 exports at 441.4 percent to $114.25 million, from $21.1 million last year.

The United States was the top destination of exports, accounting for a 17.1 percent share of total exports. Export revenues inched up 1.9 percent to $700.76 million from $687.53 million a year ago.

Japan came in second, with export revenues increasing 1.2 percent to $624.27 million from $616.93 million.

China ranked third, with export revenues surging 25.9 percent to $490.23 million from $389.23 million in May last year.

Fourth in rank was Singapore, which contracted 14.9 percent to $376.38 million from last year’s $442.51 million.

Hong Kong came in fifth with export earnings dropping 11.6 percent to $318.65 million from $360.64 million.

Total export receipts for the first five months of the year expanded 7.5 percent to $20.625 billion, from $19.185 billion during the same period a year earlier.

The government expects exports to post a growth of 9 percent to 10 percent this year.

April foreign investments down 50%

MALAYA - THE prevailing sluggish growth in advanced countries, coupled with unrest in the Middle East and North African region, resulted in lower foreign investments in April.

Data from the Bangko Sentral ng Pilipinas showed that foreign direct investments (FDIs) in April reached $81 million, 51.49 percent lower than the $167 million recorded in March.

Year on year, this was also 4.7 percent lower than the $85 million in April last year.

For April, reinvested earnings and other capital accounts yielded net inflows of $55 million and $6 million, respectively.

Net equity capital infusion amounted to $20 million, 64.9 percent lower than the level posted during the comparable period in 2010.

Net FDI inflows in the first four months of 2011 amounted to $552 million, lower by 15.1 percent from the same period in 2010.

The central bank said that this was due to "generally sluggish growth in advanced economies, particularly Japan and the United States, and the prevailing cautious investor sentiment amid heightened uncertainties as a result of the euro zone sovereign debt crisis in some parts of Europe and the social unrest in the Middle East and North Africa region."

But the BSP stressed that the country "continued to be a recipient of foreign funds on account of its strong macroeconomic fundamentals and favorable growth prospects."

Net equity capital inflows from January to April 2011 of $101 million were slightly lower by 1.0 percent than those of the previous year.

Gross equity capital placements amounted to $150 million compared to the $197 million recorded in the same period a year ago.

Investors came largely from the United States, Singapore, Hong Kong, Japan, and the Netherlands.

BSP said the real estate, mining, manufacturing, wholesale and retail trade, utilities, and construction sectors were the major beneficiaries of the equity capital placements.

The other capital account – which consists largely of inter-company borrowing/lending between foreign direct investors and their subsidiaries/affiliates in the Philippines – registered a net inflow of $283 million in the first four months of 2011, against $357 million in the same period last year.

This was due mainly to lower net loan availments by local subsidiaries from their foreign/parent companies.

Reinvested earnings in the review period amounted to $168 million, lower than the $191 million posted in the previous year.

The BSP sees FDI flows remaining positive in 2011 with the continued global economic recovery and the national government’s thrust for public-private partnerships.

In 2010, despite sound macroeconomic fundamentals, the country attracted less foreign direct investments.

FDI net inflows last year stood at $1.7 billion, 12.7 percent lower than the $2 billion realized in 2009.


Chief News Editor: Sol Jose Vanzi

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