Boston, MA -- (SBWIRE) -- 05/09/2013 -- Despite the precarious state of the global economy in 2012, the Philippines economy managed to dodge the worst of it and actually experienced a solidly above-consensus 12 months, expanding by at least 6.0% even as the rest of the region slowed. We believe that the economy of the Philippines will continue to be an outperformer in the region on the back of strong investment activity and a resilient consumer; indeed, it is set to become one of the world's top 10 fastest growing economies in 2013 and 2014. On the back of a surging construction sector, as well as the robust Philippine consumer, we estimate the economy grew by at least 6.0% in 2012. However, it will be difficult for the Philippines to maintain its impressive rate of export growth in 2013 as a strong peso begins to weigh on outbound shipments. Nevertheless, we see some signs of light in the beleaguered electronics export segment, which makes up a large portion of total exports - approximately 43.3%. Electronics exports expanded by 13.3% y-o-y in November, the strongest growth rate since February 2012 and enough to bring the 3-month moving average (3mma) to 4.9%, its fastest clip since March. In line with our expectations for China's economy to experience a transitory growth pickup in H113, the Philippines may be well-poised for a parallel uptick in electronics exports given its role in the region's semiconductor value chain. This will provide a timely boost for the freight industry in the Philippines.

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A reprieve for the country's poorly performing electronics exports would provide a huge boost for overall exports, and therefore, the shipping sector, which in 2012 relied on surprisingly high demand for the country's miscellaneous manufactures. However, such a strong performance in manufacturing is unlikely to be repeated in 2013, and exports are likely to return to dependence on the electronics sector.

By mode, 2013 is set to represent a healthy year for the Philippines freight industry. The outperformer is forecast to be the Port of Manila International Container Terminal (MICT), with year-on-year (y-o-y) growth pencilled in at just under 5% this year, while the air freight sector is also set to enjoy a stable year of growth 4.34%.

Headline Industry Data

- 2013 air freight tonnage forecast to grow 4.34% to 637,000 tonnes.
- 2013 Port of Cebu tonnage throughput forecast to rise by 4.90% to 28.13mn tonnes.
- 2013 Port of MICT tonnage throughput forecast to increase 4.98% to 20.33mn tonnes.
- 2013 total trade forecast to grow 5.50%, with exports growing 5.00% compared with import growth of 6.00%.

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