Investment bank UBS AG warned that the lack of diversification in export products makes the Philippines among the most vulnerable in the downturn of the global demand for electronics this year, local media reported on Tuesday.

In its latest investment research focusing on Southeast Asia, UBS projected the Philippines' export growth to slowdown to five percent this year, from 14 percent in 2006, due to a decline in the world's demand for electronics, according to GMA TV.

Electronics and other related products make up roughly half of the Philippines' export bill.

"In the Philippines this degree of diversification is much less where the electronics/semiconductor category accounts for 56 percent of total exports. As a result we expect Philippines manufactured exports to be relatively hard hit," UBS said.

However, UBS said domestic demand will likely take up the slack from the exports slowdown, minimizing the effect this will have on the country's economic growth for the year.

The Philippine government has projected the economy to grow anywhere between 6.1 percent to 6.7 percent this year.

Source: Xinhua