Strong start for manufacturing in 2016 – NEDA
MANILA, Philippines – The manufacturing sector started strong in 2016, led by the production of chemical products and food, according to the National Economic and Development Authority (NEDA).
In the Philippine Statistics Authority (PSA) Monthly Integrated Survey of Selected Industries for January 2016, the Volume of Production Index (VoPI) grew by 34.3%, nearly 7 times its growth rate of 5.0% in December 2015.
The Value of Production Index (VaPI) also recovered from its consistent decline since April 2015, posting 26.5% growth for January.
"The manufacturing sector is expected to grow more strongly for the year ahead following moderate growth in 2015 on account of weak global demand and adverse weather conditions," said Socioeconomic Planning Secretary Emmanuel Esguerra.
He added that a bullish outlook is anticipated for the second quarter of 2016 on the back of higher election-related spending and the expected rollout of infrastructure projects.
"Continued implementation of projects under the public-private partnership [program] and stronger domestic demand during the summer season will further support the growth in manufacturing sector," said Esguerra, who is also NEDA Director-General.
For consumer goods, food manufacturers posted a double-digit growth of 20.2% in terms of volume and 19.1% in value of production after a year of decline.
Tobacco maintained its strength, growing in volume and value of production by 49.4% and 49.6%, respectively.
For intermediate goods, chemical products posted triple-digit growth in both volume at 312.4% and value of production at 309.6%.
Petroleum, however, continued to wane as it contracted by 35.1% and 33.7% in volume and value of production due to falling oil prices.
"The continued decline in oil prices is a double-edged sword that may increase our local production but may spell displacement of some of our overseas Filipino workers, which in turn could affect the inflow of remittances," the NEDA chief said.
The average capacity utilization remained at 83.5% for the fourth straight month, with basic metals posting the highest utilization rate of 88.4%. Among firms, 25.9% operated at full capacity (90-100%), 56.4% at 70-89% of capacity, and 17.7% operated at below 70% of capacity.
Despite the surge in manufacturing, Philippine exports fell by 3.9% with all major commodities registering declines.
"The government must remain vigilant as risks to growth remain. Slow recovery in advanced economies and economic slowdown in large emerging economies will continue to put pressure on the growth of international trade," Esguerra said.
"On the domestic front, risks brought about by prolonged dry spell due to El Niño remains as a challenge," he added..
Esguerra also pointed out that adding innovation to the mix would help the manufacturing sector build on the strong start.
"We must continuously push for innovation. The country must be able to develop new products, especially those with linkages to agriculture and aquaculture, which will create opportunities for the greater number of our population to partake in the benefits of growth," he said. – Rappler.com