Manufacturing grows 9% in May
MANUFACTURING growth in May likely slowed although the sector is seen to continue growing on the back of robust domestic demand, according to Moody’s Analytics.
The research arm of debt watcher Moody’s expects industrial production to have grown 9 percent year-on-year in May, slower than the 10.5-percent jump in April. The government would be releasing the May manufacturing and exports performance data on Tuesday.
But as a whole, “Philippine manufacturing has been expanding rapidly in 2016 due to the strongly performing domestic economy,” Moody’s Analytics noted in a report issued last week.
The gross domestic product grew by a better-than-expected 6.9 percent in the first quarter. The economy was widely expected to have expanded faster in the second quarter due to election spending.
The economic managers of the Duterte administration last week cut to a “conservative” 6-7 percent the growth target for 2016 from the 6.8-7.8 percent goal earlier set by the Aquino administration as the new government undergoes an adjustment before it could perform at full speed.
According to Moody’s Analytics, “food manufacturing in particular has been performing well, as the agriculture sector recovers from the negative effects of 2015’s El Niño climate pattern.”
State planning agency National Eco nomic and Development Authority (Neda) last week urged the government to start preparing for the prolonged wet season due to La Niña while farmers recover from the impact of the dry spell brought by El Niño, which was seen to end by midyear.
“We should intensify monitoring the status of flood control projects and the clearing of drains and waterways. We also need to improve the agriculture logistics chain by constructing more bridges to connect farming areas separated from markets by rivers that are non-traversable during the rainy days,” Neda Director-General and Socioeconomic Planning Secretary Ernesto M. Pernia said.
Last week, DBS Bank Ltd. economist Gundy Cahyadi said the Duterte administration’s plan to further liberalize the economy by raising the cap of foreign ownership of local firms to 70 percent from about 40 percent at present while also lifting limits on land lease to 40 years from 25 years would benefit foreign direct investment flows, especially on manufacturing.
“About 60 percent of FDI applications over the past five years have been directed in the manufacturing sector. We reckon this high interest in the sector will continue. Manufacturing is a key sector that the Duterte administration will focus on to absorb the growth in labor force. It would also fulfill the ambition to diversify the economy from an over-dependency on services,” Cahyadi said.
