MANUFACTURING output in June is estimated to have increased by 5.1 percent, driven mainly by food production, according to the economic research arm of Moody’s Investors Service.
In its latest weekly outlook issued while the Philippine Statistics Authority (PSA) is due to release the June output data this Wednesday, Moody’s study said that strong domestic consumption and investment growth have made the Philippine economy one of the fastest growing.
“The most consistent contributor to industrial production growth in recent months has been food manufacturing, reflecting the improvement in agriculture as it recovers from 2015’s El Niño climate pattern,” it noted.
In May this year, manufacturing growth as measured by the Volume of Production index (VOPi) had decelerated to 1.2 percent from a 1.1 percent drop in May 2015 and 11.8 percent increase in April 2016. It had suffered 1.7 percent drop in June 2015.
Decline in May was traced mainly from 10 major sectors, led by chemicals, petroleum, electrical machinery, fabricated metal products, textiles, leather products, non-metallic mineral products, footwear and wearing apparel, furniture and fixtures, and paper and paper products.
The country’s socioeconomic planning body National Economic and Development Authority (NEDA), also supports Moody’s view. It said, industrial output is expected to improve towards the end of the second quarter as business sentiment remains optimistic and supported by stable consumer confidence.
According to NEDA, the manufacturing sector is expected to benefit from the economic agenda of the current administration, particularly on increasing competitiveness, easing business processes, accelerating infrastructure spending, and attracting foreign direct investment.
It, however, warned that subdued global economic prospects, weaker-than-expected economic performance of major trading partners, and weather shocks such as La Niña and typhoons remain risks to the manufacturing sector’s growth.
“The provision of adequate, sustainable and reliable infrastructure must be accelerated, and the capacity of MSMEs [micro, small and medium enterprises] must be further enhanced by strengthened linkages with large corporations and through knowledge and technology transfer,” it said.
“Public and private investments in research and development activities must be encouraged. Engagement in high technology endeavors, as well as attracting foreign direct investments, will be influential to paving the way for the much needed blossoming of high-tech manufacturing sub-sectors in the country,” it added.