Economic Highlights (Philippines) - 11/04/2013

Exports Rebounded Sharply In February Amid Strengthening Global Demand

¨      Philippines’ merchandise exports surged to 24.4% y-o-y in February 2014, from +9.2% in January and compared with +15.8% in December 2013. This marked the fastest pace of expansion in three years and was above the median estimate of +16.6% y-o-y, signaling a recovery in exports in tandem with strengthening global demand and aided by a weaker peso.

¨      The acceleration in February’s exports was attributed to a pick-up in the exports of manufactured products and a strong rebound in the exports of agro-based, mineral and petroleum products. In terms of export destination, the surge in February’s exports was led by a sharp acceleration in the exports to Japan and China.

¨      Going forward, investors are paying close attention to China’s latest developments as they are worried about its economic prospects and whether it could avoid a full-blown credit crisis given the tremendous challenges facing policymakers. Although there are downside risks, we are of the view that China has the capability and financial power to overcome it. Also, we are seeing some bright spots in the global economy and global growth is building momentum, broadly supported by the advanced economies. As a whole, the world economy is on track to chart a stronger growth in 2014. This will likely benefit Philippines’ exports in 2014.

¨      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 and subsequently to +6.5% in 2015, after growing by a modest +0.8% in 2013. 

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