PHILIPPINE manufacturing output likely rose 7.8 percent in May, accelerating from a 5.9 percent increase in April, Moody’s Analytics said in an estimate ahead of the release of official data next week.
The economic research unit of Moody’s Investors Service expects the Volume of Production Index (VoPI) in May to post growth above the 7.4 percent expansion recorded in May 2016.
“The archipelago’s manufacturers are receiving a boost from improved global demand, which is supporting the export-oriented electronics industry,” it said.
The electronics sector has always been a top income earner among the country’s exporters, accounting for 49.6 percent of total export revenues in the first four months of 2017.
Strong domestic demand
The research firm added, “but the main driver of manufacturing growth will continue to be domestic demand.”
“Both private investment and consumption are rising rapidly, thanks to favorable demographics and ample investment opportunities that will leave the Philippines as one of the fastest growing economies globally for the foreseeable future,” it said.
The estimate by Moody’s Analytics is in line with the National Economic and Development Authority’s outlook for the sector.
Socioeconomic Planning Secretary Ernesto Pernia had said manufacturing output was expected to sustain its growth following anticipated increases in demand during the harvest season and the school enrolment periods.
Pernia had also projected that demand for diesel would be on the rise as governments in the Middle East were stocking up for the Ramadan season at the time.
The government’s “Build Build Build” infrastructure program is anticipated to further increase construction activities in the country, which will provide additional boost to the manufacturing sector, he said.
The government has programmed to spend P847 billion on infrastructure development this year, covering projects in all regions, including small-, medium- and large-scale ventures.
For the six years to 2022, the government has set a target of spending P8.4 trillion on infrastructure.
Pernia said to sustain growth in the manufacturing sector, research and policies must be pursued to increase product innovation, enhance investor confidence, and strengthen linkages across production sectors.
The Philippine Statistics Authority is scheduled to release the official manufacturing output figures for May on Tuesday, July 11.