Exports rise for 1st time in 8 months

MANILA, Philippines — Exports rose in September, the first time since February, boosted by demand from China which is already recovering from the pandemic, the Philippine Statistics Authority (PSA) reported yesterday.

Total export sales grew by 2.2 percent to $6.22 billion in September, coming from a 12.8 percent annual decline in August when outbound sales reached $5.5 billion.

Year-to-date export earnings, however, remained lower by 13.8 percent at $45.87 billion from January to September compared with the same nine-month period last year.

“The jump in exports was likely due to a pickup in exports to China, which zoomed by 43 percent as their economy appears to be back on track after controlling the virus,” said Nicholas Mapa, senior economist at ING Bank in Manila.

“Exports of coconut oil and other mineral fuels helped this rise, possibly given coconut oil and its use in therapeutics.”

Outbound shipments to China, with a total value of $1.22 billion, comprised 19.6 percent of total exports in September.

By economic bloc, demand for Philippine exports were strongest in Asia-Pacific Economic Cooperation (APEC) member countries which absorbed 86.2 percent of the country’s merchandise exports in September.

This was followed by East Asia and ASEAN, which absorbed 54.5 percent and 15 percent of Philippine exports in September, respectively.

Reduced constraints on logistics and global supply chains as economies recover also contributed to the return of exports to positive territory, said Michael Ricafort, chief economist at Rizal Commercial Banking Corp.

“Further reopening of many countries around the world from lockdowns, especially the country’s major market for exports, would further support the pick up/recovery in exports volume in the coming months as seen recently,” he said.

Despite the growth in exports, the country’s total external trade continued to contract in September because of the still double-digit decline imports which decelerated for the 17th consecutive month.

Total trade, which amounted to $14.14 billion, declined at an annual rate of 9.2 percent in September, slower than the 17.9 percent annual decline in August.

Imports declined by 16.5 percent annually, totalling $7.9 billion in September, a slower decline compared with 21.3 percent in August when import receipts added up to $7.3 billion.

Declines were fastest in the importation of transport equipment, fuels, and industrial machinery and equipment, all of which were crucial to production.

“The sustained downturn in imports of raw materials and capital goods points to a continued deterioration in productive capacity and potential output, which does not bode well for prospects for the economic recovery,” said Mapa.

Ricafort said this also indicates that many businesses are still operating way below their usual capacity amid measures implemented to control the contagion.

“Relatively slower imports compared to a year ago and versus pre-COVID-19 levels still reflect relatively slower pickup/recovery in the local economy as many businesses/industries still operate way below the usual capacity amid social-distancing and other stringent measures/health protocols to prevent COVID-19 from spreading further,” he said.

As imports still outpaced exports, the balance of trade registered a narrower deficit of $1.7 billion which, while not supportive of economic growth, will prop up the peso.

“We expect the peso to remain supported to close out the year and the change in net exports to be the lone bright spot for the third quarter gross domestic product release,” Mapa said.