The rainy season, US interest hikes and protectionism could cut the country’s manufacturing output in the coming months, according to the National Economic and Development Authority (Neda).
In a news statement issued on Thursday, Socioeconomic Planning Secretary Ernesto M. Pernia said, however, that he remains optimistic about the sector’s performance in the second semester.
The Neda said the manufacturing sector grew by an average of 10 percent in the first six months of 2017 on the back of strong factory output coming from the food sector. This is higher than the 9-percent average growth posted in the same period last year.
“Looking ahead, the outlook for the manufacturing sector remains optimistic on the back of favorable domestic conditions, such as stable inflation rate, robust economic demand, increased investments and business confidence,” Pernia added.
“[But] we need to be ready for possible disturbances in business activities during the rainy season. External risks, on the other hand, include the planned interest-rate hikes of the US and the inward-looking trade policies of major economies,” he added.
Pernia said there is a need to expand production capacity and to encourage entry of new manufacturing firms so as to keep prices low and stable.
He added the government is addressing this in terms of investing heavily on infrastructure and streamlining government procedures to reduce the cost of doing business in the Philippines.
The data is based on the Monthly Integrated Survey of Selected Industries (Missi) for June 2017 of the Philippine Statistics Authority.
In June the volume of production index and value of production index for manufacturing increased by 8.1 percent and 5.1 percent, respectively, from their June 2016 levels.
The Neda said the increases were driven by the increase in construction-related and export-oriented products, food manufacturing, transport equipment and petroleum products.
The agency added the increase in the production of basic metals, fabricated metal products and non-metallic mineral products boosted the construction sector.
Leather products and footwear also led the increase in production of export-oriented goods.
The Missi is a report that monitors the production, net sales, inventories and capacity utilization of selected manufacturing establishments to provide flash indicators on the performance of the manufacturing sector.
