Philippines exports recovered in February, but by much less than expected given the previous sharp falls (February: +4.6% m/m sa; January: -13.7%; December: -10.8%). A more substantial normalisation was expected following disruption due to the additional public holidays of January related to the Pope's visit, as well as the easing of congestion at Manila Port.
Despite the weakness, the electronics sector - around 40% of exports - has done relatively better, with exports rising 4.8% y/y in February. Outside of electronics, the weakness was fairly broadbased, with negative y/y growth in transport equipment and machinery (-15.5% y/y), non-electronics manufactures (-15.8%), and agricultural products (-12.4%). By country, consistent with regional peers exports to China have been particularly weak (-34.8%), while shipments to the US remained strong (+16.7%).
Barcalys research shows the expect export growth to recover further in March following the easing of congestion at Manila Port, though weak demand from China could remain a drag.
BSP also appears comfortable with its policy stance. Although low inflation is provides room to keep policy on hold, growth remains robust, making it unlikely that the BSP will join other central banks in the region in easing policy.
The next policy move from BSP will be a hike, most likely in Q4 15, after the Fed begins tightening, says Barclays.
