REGIONAL banking giant DBS downgraded its forecast on the local export growth owing to slower economic recovery and uncertainty of the demand for electronic products.
DBS Bank said export growth is still seen to disappoint in the coming months, despite the positive growth it posted in May this year.
As such, the bank lowered its full-year forecast of export growth to 5 percent from the earlier 9 percent. The new assumption is slightly below the government’s projection of a 6-percent growth for exports at the end of 2014.
The Philippine Statistics Authority earlier reported that the country’s merchandise exports grew by 6.9 percent in May this year.
“Export growth came in at 6.9 percent year on year in May, well above the negative print expected by the markets. This was a pleasant surprise following two consecutive months of lackluster performance,” the bank said.
“This does not hide the fact that export growth has been a little disappointing, though,” the bank added.
The slower pace of global economic recovery was pointed out as one of the reasons of the expected slower remittances.
Likewise, the electronic exports—which are the top export product of the Philippines—are expected to remain volatile until the fourth quarter, adding to the downward pressure on exports this year.
Because of that, the Philippine economy will have to turn to domestic consumption for growth support, as prospects of this sector are still optimistic, given early indicators.
Despite the predicted slowdown, the DBS Bank remained confident that the exports will post larger numbers than the imports this year to hit a net export contribution to the overall gross domestic product for 2014.
Several domestic economists have earlier made similar comments on the projected slower export growth for 2014. Among the factors mentioned are weak external demand, port congestion and the effects of the imposed truck ban in Manila.
The government expects exports to hit $47.4 billion by the end of the year.
Written by: Bianca Cuaresma