The Philippines pins growth hopes on electronics exports surge

Electronics exports jumped 9.3% in November.

The Philippines is ahead of its peers when it comes to electronics exports, according to a report by DBS.

DBS noted that export growth of electronic products from the Philippines is trending at around 8% per year, an impressive feat when compared to sluggish growth elsewhere in the region.

“Considering that global growth was also somewhat disappointing in 2015, the sustained growth in electronic exports is also an encouraging sign for the medium-term,” said DBS.

Here’s more from DBS: 

The economy is still driven mostly by domestic demand. The outlook of consumption and investment growth is far more important for the GDP growth outlook. And from the external flows perspective, as far as remittance flows remain robust, exports data may not matter as much. 

It is hardly surprising then that the peso has been relatively stable this year, despite regional growth concerns stemming from China risks. Not that exports data should be completely ignored going forward. 

Bangko Sentral ng Pilipinas (BSP) turned more tolerant of a softer currency in 2H15, just as export growth turned deeper in the negative. 

The outlook of export growth may have an impact on the central bank’s policy stance. At this juncture, we expect export growth to rebound to about 7% in 2016, pretty decent given the projected 6% fall last year. Accordingly, we reckon that there is a good chance that BSP may raise its key policy rate by 25bps in 2H16.