Weak export growth seen to continue in Emerging Asia

MANILA, Philippines — Weakness in export sales is expected to continue in emerging Asian economies throughout the year on the back of weaker global demand and high inventory of electronic products, London-based Capital Economics said.

In its latest Emerging Asia report, the research firm said growth in technology exports from the region, particularly semi-conductors, is expected to be held back in the coming months because of high inventory levels.

“In the months ahead, any recovery in electronics exports is likely to be held back by high levels of inventories. The stocks component of the global electronics PMI remains close to an all-time high, as falls in demand have outpaced falls in production,” the research firm said.

Capital Economics said the expected decline in commodity prices for the remainder of the year may also affect export earnings.

“We think commodity prices will fall back over the remainder of the year, weighing on the price of commodity producers’ shipments. What’s more, weakness in the global economy will weigh on external demand and limit scope for a recovery in export volumes,” it said.

Philippine exports continued to decline in February because of diminished sales of five of the country’s top export products: metal components, gold, machinery and transport equipment, manufactured goods, and ignition wiring sets.

Exports registered a decline of 0.9 percent to $5.18 billion in February from $5.23 billion in February 2018.

This, however, was so far the slowest decline in four months as a slowdown to one percent was seen in November 2018, and negative growths of 12.2 percent and 6.7 percent were seen in December 2018 and January, respectively.

Capital economics said most recent data from other countries such as the export outturn in Korea over the first 20 days of April and March data for Thailand showed weak results that “suggest that regional trade remains in the doldrums.”

“With the external sector facing a number of headwinds, we think this weakness will persist over the remainder of the year,” it said.

Early this month, Capital Economics said falling exports would cause growth across Emerging Asia to be at its weakest since the global financial crisis a decade ago.

It, thus, expects governments to loosen policy to offset weakness in the economy.

For the Philippines, however, it expects robust domestic demand to prop up the economy amid weakness in exports.