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INSTANT VIEW 1-Philippine August exports drop to 8-mth low

MANILA, Oct 10 (Reuters) - Philippine exports fell inAugust, posting the steepest drop and lowest value in eightmonths, the statistics office said on Wednesday, putting morepressure on the central bank to ease its policy rates further tosupport domestic growth.

Electronics and semiconductor shipments, which dominateexports, fell for the fifth straight month in August on weakdemand from big markets like the United States and China.

The latest data brought exports in the first eight months ofthe year to $35.3 billion, up 5.4 percent from a year ago.

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KEY POINTSAug 2012 July 2012 Aug 2011Exports $3.80 bln $4.73 bln $4.17 blnyr/yr change (pct) -9.0 6.0 -12.6mth/mth change (pct) -19.7 9.6 -6.4Electronics $1.77 bln $1.68 bln $2.07 blnyr/yr change (pct) -14.9 -25.6 -30.6mth/mth change (pct) 5.4 -11.2 -8.0

NOTE: Some numbers for previous months have been revised.

- Electronics made up 46.5 percent of August export revenues,with woodcrafts and furnitures as the second biggest exportitem, comprising 5.4 percent of total.

- Exports to Japan, the country's top export destination inAugust, rose 4.6 percent from a year earlier.

- Exports to Singapore, the second-biggest market, up 63.6percent from a year earlier.

- Shipments to the United States, the third-biggest market,down 18.7 percent from a year ago.

- Exports to Eastern Asia -- the top export destination byeconomic bloc, accounting for 45.8 percent of total shipments --down 13.7 percent from a year earlier. Southeast Asia and theEuropean Union were the second- and third- biggest economicblocs.

COMMENTS:

JUN NERI, ECONOMIST, BANK OF THE PHILIPPINE ISLANDS, MANILA

"It is the first time we fell below the $4 billion mark fortotal exports since December of last year. Over the two yearperiod, it is a more than 21 percent contraction.

"We would probably qualify that August was the Habagat(monsoon) month and some degree of disruption must have takenplace to affect the deliveries, so we would expect someimprovement will take place in September.

"Nonetheless, it is a cause for concern and something has tomitigate the soft numbers we are getting from exports in thethird quarter if we are to sustain the 5.5 to 6 percent growthtrajectory of the Philippines.

"The government has to step up both its deficit spending andmonetary policy stance to help sustain the strong performance inthe first half.

"Aside from the headline drop in dollar receipts of 9billion, if you account for the almost 6 percent appreciation ofthe peso year to date, that is going to hurt the exporters evenmore. Even more reason for the BSP (Bangko Sentral ng Pilipinas)to cut policy rates before the end of the year."

BACKGROUND:

- Economic Planning Secretary Arsenio Balisacan has saidrising orders from other countries and healthy demand for thePhilippines' agricultural products should offset soft demandfrom traditional markets for its main semiconductor products.

- The economic planning chief has said the country willlikely meet the high-end of its 5 to 6 percent growth as strongdomestic demand will likely compensate for the weakness inexports.

- The Semiconductors and Electronics Industries in thePhilippines Inc cut its export growth forecast this year to 5-7percent from 10-15 percent on slowing demand, although the groupis hopeful of a rebound in orders in the second half aftercurrent inventory cuts stabilise.

- The government has forecast export growth of 10 percentthis year. It has trimmed its import growth forecast to 12percent from 15 percent as manufacturers feel the brunt of theglobal economic slowdown.

- The Philippine central bank kept its key policy rate lastmonth, but economists believe that with inflation under control,it may ease policy further before the year ends to support theeconomy and contain the peso's strength.

- The Philippines provides about 10 percent of the world'ssemiconductor manufacturing services, including for mobile phonechips and micro processors. Semiconductors account for aboutthree-fifths of exports.

- Other top exports include garments and accessories, woodfurniture, vehicle parts, coconut oil, and tropical fruits.

LINK:

- National Statistics Office website

(Reporting by Erik Dela Cruz; Editing by Rosemarie Francisco)

((karen.lema@thomsonreuters.com)(+632 841-8938)(ReutersMessaging: karen.lema.reuters.com@reuters.net))

Keywords: PHILIPPINES ECONOMY/EXPORTS