Philippine industrial production likely slumped anew in December 2017, Moody’s Analytics said, with persistent weakness seen up until the middle of 2018.
In its Asia Pacific Economic Preview, the research arm of Moody’s Corp. said the country’s industrial production last December could have contracted by 12.4 percent.
This is after the industrial sector’s performance—reported as the volume of production index (VoPI) by the Philippine Statistics Authority monthly—declined by 8.1 percent in November 2017.
While declines in the sector have been significant, Moody’s Analytics showed no sign of concern regarding the health of the industrial sector, saying the contractions were likely caused by its outperformance in the previous year.
“The downswing in industrial production growth likely deepened last December. Industrial production likely fell 12.4 percent year-on-year, after an 8.1-percent decline last November. Industrial production has been in a downturn since the start of 2017, much of which reflects the high base from one year earlier,” Moody’s Analytics said.
The think tank also said they expect the impact of this high base to fade within the year, and is likely to lead to firmer industrial production growth by mid-2018, especially with public works set to scale up during the year.
Declines in the country’s industrial production in November 2017 was attributed to the contraction in six major sectors lead by production of chemical products—which declined by 62.7 percent.
The steep decline in the production of chemical products during the month outpaced the increments of 14 major sectors.
Three other major sectors that contributed to the shortfall in VoPI were tobacco products, with a decline of 48.3 percent, textiles contracting by 33.8 percent and footwear and wearing apparel which was down by 3.9 percent.
The huge decline in production in the tobacco sector was attributed to the wait-and-see stance of tobacco makers, as they remain cautious over the higher excise tax coming into 2018.