Philippine export industry to slow down in 2011

The recovery of the Philippine export industry this year is expected to remain at double-digit level but would decelerate in 2011 to a slower pace.

In the draft three-year export development plan, the Export Development Council (EDC) had targeted the sector’s growth at 13 percent a year for the planned period.

The National Economic and Development Authority (NEDA) also sets the same growth target for exports in 2011.

The 2011target is considered modest in the heels of a 37.2 percent growth in exports from January to October this year reflected in the latest trade figures released by the National Statistics Office (NSO).

Ten months of commodity export revenues in 2010 totaled US$43 billion, over $11 billion higher than exports for the same period in 2009 at $31.39 billion. It was a quick recovery from a negative 28.9 retreat in 2009 as a result of the global recession.

With hefty growth in the importation of electronics components and machine parts in October, the high growth path is seen to be sustained until the end of this year when full recovery of the sector is seen to finally equal, if not exceed that in the peak export revenues of $51 billion in 2007.

Raw material imports jumped 36.6 percent in October, while capital goods for expansion kicked up by 32.1 percent, the NSO reported.

The strong peso is however expected to bear down on the sectors sustainable growth, explained Sergio R. Ortiz-Luis, Jr., EDC vice chairman and head of the Philippine Exporters Confederation, Inc. (PHILEXPORT).

Economic planning chief Cayetano Paderanga, Jr., on the other hand, saw a volatile exchange rate as just one of the threats to the sustainability of export growth in the coming years.

He pointed out a fragile global economic condition, shaky fiscal conditions locally, higher oil prices, rising consumer prices, ill effects of weather disturbances and a narrowing source of investments among the risks to hefty export growth.

Paderanga further pointed out the need for the Aquino administration to adopt measures to reverse the country’s deteriorating competitiveness compared to its ASEAN neighbors including Vietnam, Thailand, Malaysia and Indonesia.