Economic Highlights (Philippines) – 12/05/2014

Exports Moderated In March, But Recovery Remains Intact

u  Philippines’ merchandise exports moderated to 11.2% y-o-y in March 2014, from +24.4% in February and it came in below the median estimate of +13.2% y-o-y. Nevertheless, March’s double-digit number reaffirmed that exports in the Philippines continued to recover in tandem with strengthening global demand.

u  The moderation in March exports was attributed to a slowdown in the exports of manufactured and mineral products while the exports of petroleum products contracted sharply. These were, however, partly mitigated by the pick-up in agro-based and forest products. In terms of export destination, the slowdown in March’s exports was led by a sharp drop in the exports to China and made worse by the moderation in the exports to the US, EU and Japan.

u  Going forward, the global economy will likely maintain its steady recovery trajectory, supported by accommodative monetary policy while inflation remains not a threat. As a whole, the world economy is on track to chart a stronger growth in 2014. This will likely benefit Philippines’ exports in 2014.

u  Philippines’ exports are set to capitalise on the recovery in global semiconductor demand. Also, Philippine exporters will likely continue to benefit from a weaker peso, though this may push up the price of imports. As a whole, we expect real exports to pick up pace to 5.9% in 2014, after growing by a modest +0.8% in 2013.

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