Philippine Imports Fall as Electronics Orders Slump

By Francisco Alcuaz Jr.

Dec. 24 (Bloomberg) -- Philippine imports fell for the first time in 17 months as demand waned for raw materials used by electronics exporters amid a global recession.

Overseas purchases slid 11.1 percent to $4.58 billion in October after climbing 2.5 percent in September, the National Statistics Office said in Manila today. Exports dropped 14.9 percent in October, the most in seven years, the agency said earlier this month.

The World Bank expects global trade to shrink in 2009 for the first time in more than 25 years, threatening export-reliant economies in Asia. The Philippines last week cut interest rates to support growth as the global slump weakened demand for Intel Corp. computer chips and other electronics goods, which account for two-thirds of the nation’s overseas sales.

“The Philippine story is about a lack of diversification in its export basket, an over-reliance on electronics, that’s why imports and re-exports are hit simultaneously,” said Radhika Rao, an economist at Ideaglobal Ltd. in Singapore. “These products are discretionary and in this scenario of recession, consumers tend to cut back.”

Electronic chip sales will fall 2.2 percent this year, the first decline since 2001, and another 5.6 percent next year on lower computer and mobile-phone sales, according to the San Jose, California-based Semiconductor Industry Association.

The decline in imports was the first since May 2007 and the sharpest in five years, today’s report showed. Electronics imports, most of them components and raw materials used to make goods that are exported, fell 30 percent to $1.63 billion. Raw material purchases decreased 17 percent to $1.71 billion.

Capital goods purchases declined 11 percent to $1.44 billion. Imports of crude oil and other mineral fuels and lubricants fell 5 percent to $904 million. Consumer goods purchases increased 3.9 percent to $467 million.

The trade deficit widened to $606 million in October from $491 million a year earlier. For the first 10 months, the shortfall was $7.03 billion, compared with $3.41 billion a year earlier.

To contact the reporter on this story: Francisco Alcuaz Jr. in Manila at falcuaz@bloomberg.net