LOWER PRICES PARTLY AFFECT IMPORTS GROWTH IN MAY ‘13

MANILA—The National Economic and Development Authority (NEDA) said that lower payments for capital goods, mineral fuels and lubricants mainly accounted for the imports performance in May 2013 despite more inward shipment of selected capital goods.

This statement came after the National Statistics Office (NSO) reported that merchandise imports contracted to US$5.3 billion in May 2013 from US$5.4 billion a year ago, or by 2.4 percent.

Socioeconomic Planning Secretary Arsenio M. Baliscan noted that payments for imported capital goods declined by 21.8 percent for the same period due to lower import bills in three commodity groups: telecommunication and electrical machinery; aircraft, ships and boats; and photographic equipment and optical goods.

“However, the decline in the import value of these three commodity groups may be due to price effects, as import volume of these capital goods actually grew by 8.0 percent (telecommunication and electrical machinery), 27.3 percent (aircraft, ships, and boats), and 2.5 percent (photographic equipment and optical goods), respectively,” he said.

Balisacan added, “The more robust importation of telecommunication and electrical machinery, as well as aircraft, ships and boats, in terms of volume may have resulted from the ongoing modernization program of a major telecommunication company and the delivery of a new Boeing 777 which is for the route expansion of Philippine Airlines.”

The Cabinet official, who is also NEDA Director-General, expects improvements in the foreign purchases of capital goods in the near-term as businesses, particularly in the mining and quarrying subsector, continue their expansion plans.

Balisacan also noted that imports of raw materials and intermediate goods amounted to US$2.2 billion in May 2013, which is higher by 13.3 percent compared to US$2.0 billion in May 2012.

“This favorable performance mainly reflected the broadly upbeat sentiments of the business sector in the second quarter of 2013. Based on the Bangko Sentral ng Pilipinas (BSP)’s Business Expectations Survey, firms cited expansion of businesses, new product lines, brisker business and seasonal uptick in demand as the factors behind their buoyant outlook,” he said.

Semi-processed raw materials, which accounts for about 87 percent of total raw and intermediate goods, expanded by 11.1 percent, and this was driven primarily by materials/accessories for the manufacture of electrical equipment (20.6%), manufactured goods (13.2%), embroideries (211.5%), and animal feeds (10.6%), according to the NSO.

Balisacan said that the rebound in importation of materials/accessories for the manufacture of electrical equipment may have been due to the anticipation of a higher global demand for electronics.

“International industry analysts see that semiconductor industry will grow moderately in 2013.  This may signal a recovery in the country’s electronics exports in the coming months following a series of contractions since December 2012,” he said.

Also, import payments for consumer goods grew by 7.9 percent to US$712.9 million in May 2013 from US$660.8 million in the same period in 2012.

“This positive outturn mirrored the improved outlook of consumers in the second quarter of 2013 as a result of optimistic employment expectations and strong macroeconomic fundamentals.  Based on BSP’s Consumer Expectations Survey for the second quarter of 2013, consumers generally view the period as a favorable time to buy durable goods,” said Balisacan.

Balisacan pointed out that major trade-oriented economies in the East and Southeast Asian region posted annual contractions in merchandise imports in May 2013, except for Hong Kong (9.1%) and Malaysia (0.5%).

“Japan recorded the steepest decline in imports among selected Asian countries during the period.  The contraction in Japan’s overseas purchases by 13.1 percent may have resulted from the year-on-year depreciation of yen against the US dollar,” Balisacan said.

Other countries that recorded negative imports performance in May 2013 were Taiwan (-8.0%), South Korea (-4.6%), Singapore (-3.4%), Indonesia (-2.2%), Thailand (-2.1%), and China (-0.3%).

For the first five months of 2013, the total value of merchandise imports contracted by 3.6 percent to US$24.8 billion from US$25.7 billion in 2012, according to the NSO.

The NEDA official said that most Asian counterparts also recorded negative import performance for the first five months of 2013.  Among them are Japan (-8.7%), Singapore (-4.4%), South Korea (-2.8%), Indonesia (-1.8%), and Taiwan (-0.9%).  On the other hand, Hong Kong (13.8%), Malaysia (5.3%), China (8.2%) and Thailand (5.7%) posted positive import performance

MR No. 2013-065

26 July 2013