MANILA, Philippines — The electronics sector, the country’s main export, is facing near-term headwinds due to price pressures from global tensions and an economic slowdown in China.
In its weekly economic overview, New York-based financial intelligence firm S&P Global said the electronics industry in Asia-Pacific was challenged by several factors.
Electronics is the Philippines’ main export product, accounting for nearly 60% of total revenue.
The latest data showed the country’s dollar revenue from electronics barely changed 0.8 percent to $3.25 billion in April.
This is a dismal increase from January’s 8.2% rise, February’s 15.1% jump and March’s 8.1% expansion.
Rajiv Biswas, S&P Global Market Intelligence’s chief economist for Asia-Pacific, said the prolonged lockdown in China over the past few months has affected consumer demand.
China remains the Philippines’ top export destination with $972 million or 15.9% of total exports in April.
“The global electronics industry has seen some moderation in growth momentum in recent months. This reflects a number of headwinds related to both demand and supply factors,” Biswas said.
“Stricter COVID containment measures have contributed to weaker consumer demand in China. The industry also continues to struggle with long lead times from suppliers for certain components and raw materials, as well as price pressures on critical materials,” he said.
The electronics manufacturing industry is an important part of the manufacturing export sector of many Asian economies, including South Korea, mainland China, Japan, Malaysia, Singapore, the Philippines, Taiwan, Thailand, and Vietnam.
Manufacturers are also facing intense pressure on raw material prices and supplier fees.
Biswas said there were many reports of rising commodity prices due to large imbalances between supply and demand.
Plastics, chemicals, electronics, metals, energy and petroleum were all widely cited by companies as sources of rising input prices.
Despite the headwinds, Biswas stressed that the outlook for the electronics industry is one of continued expansion.
Long production delays of some key electronics products, including semiconductors, will be an important factor supporting electronics production in the second half of the year.
Biswas noted that the pandemic continues to accelerate the pace of digital transformation due to the global shift to remote working, which in turn is driving demand for electronic devices such as computers, printers and cellphones. .
He said the medium-term economic outlook remains favorable for the electronics industry, with strong and sustained global economic growth forecast through 2024.