The National Economic and Development Authority (NEDA) sees improvement in 2012 exports performance despite a decline in 2011.

NEDA Director General Cayetano Paderanga Jr. said over the weekend that external factors continued to affect the merchandise exports performance in December last year, that pulled down global demand and eventually local industrial production.

The National Statistics Office (NSO) earlier reported that the value of goods exports dropped by 20.7 percent to $3.3 billion in December 2011 compared to the previous year, with full-year earnings for 2011 contracting by 6.9 percent.

“The performance of the country’s exports in December 2011 reflects the still subdued industrial production and sluggish global demand. In addition, the disruption of production nodes in Thailand further exacerbated manufacturing activities, particularly in the electronics and automotives sectors,” Paderanga said.

Paderanga, who is also the Socioeconomic Planning Secretary, noted that the full-year merchandise export growth was below the 5-percent assumption for 2011.

“This is also below the 10-percent merchandise export growth target set in the Philippine Export Development Plan [PEDP] for 2011-2013,” he added.

Furthermore, the Cabinet official said that with a total value of only $1.5 billion compared to $2.3 billion in December 2010, electronic exports continued its decline in December 2011.

“The decline in the country’s electronic exports in December 2011 reflected the developments in the global semiconductor market. The United States Semiconductor Industry Association reported that worldwide chip sales contracted by 5.3 percent in the said month, primarily due to weak demand in the US, Europe and Japan. In addition, the supply chain disruption caused by the massive flooding in Thailand continued to drag down the global electronics sector, particularly the automotive segment,” Paderanga said.

Decline in electronic exports
The NEDA director general added that other electronics subsectors weighed down export revenues despite the country’s higher earnings from export of office and telecommunication equipment in December 2011.

The subsectors with lower sales include semiconductors, electronic data processing, communication/radar, automotive electronics, consumer electronics, medical/industrial instrumentation and control and instrumentation.

Besides electronics, the NSO reported that exports of mineral and petroleum products also went down to 25.3 percent and 44.6 percent, respectively, in December 2011. However, total agro-based exports increased by 6.9 percent.

“For 2012, the performance of merchandise exports is expected to improve. The DBCC [Development Budget Coordination Committee] assumes that merchandise exports will grow by 10 percent. In terms of levels, the PEDP 2011-2013 is keeping its target of $62.3 billion export revenues for 2012. However, significant downside risks to projections, associated with the weak global demand resulting from slower growth in advanced economies and other major markets such as PR [People’s Republic of] China and Asean [Association of Southeast Asian Nations], remain,” Paderanga added.

He also said that electronics exports will continue to experience weak growth in 2012 since it accounts for more than half of total receipts, and are mainly produced under contract manufacturing.

“Industry reports noted that contract manufacturing business, which is composed of electronic manufacturing services and original development manufacturing, is anticipated to decline slightly worldwide in 2012. It was also reported that total contract manufacturing revenue will decline by approximately 1 percent [or $3 billion] from $360 billion in 2011,” he said.

Meanwhile, Paderanga called for more extensive government and private sector commitment to the implementation of the strategies in the PEDP.

He added that diversification strategies should be more aggressively adopted to minimize the country’s vulnerability to adverse shocks, both external and domestic.

“Medium-term reforms should continually be implemented to improve trade logistics, business and policy environment, labor productivity, the link between exporters and micro, small and medium enterprises, research and development, and technology in order to move up the value chain and enhance the competitiveness of the export sector,” he said.