The country’s manufacturing output likely expanded at a robust pace in September and is poised to maintain the favorable performance shown so far this year through 2014, according to Moody’s Analytics.
Volume of production by manufacturers may have grown by 16 percent in September from a year ago, Moody’s Analytics said, on the back of strong domestic demand.
Should the forecast be correct, the average rise in manufacturing output in terms of volume would settle at 11.4 percent in the first nine months, faster than the 5.6 percent registered in the same period last year.
In August, volume of production by the country’s manufacturers grew by 18.3 percent year on year. The drivers for the month were furniture and fixtures; leather; chemicals; basic metals; tobacco; beverages; nonmetallic minerals; wood; plastic products; and rubber.
Official figures on the performance of the manufacturing sector for September will be released this week by the National Statistics Office (NSO).
“Industrial production boomed in 2013 and is a key driver of broader economic activity,” Moody’s Analytics said in its latest outlook report covering countries from the Asia-Pacific.
The international research unit said the country’s manufacturing sub-sector was benefiting from strong demand from domestic households and enterprises. This demand has more than offset weak export earnings, it said.
“This is likely to continue through the remainder of the year and into 2014,” the research unit added.
Moody’s Analytics credited improved sentiment on the Philippine economy that encouraged local firms to invest more.
While household consumption has long been a key growth driver of the Philippine economy, the significant increase in local investments, particularly in the manufacturing subsector, is a recent development.
Government economists claimed this is due to efforts to curb corruption and projections that the Philippines will continue to outperform industrialized and some developing countries in terms of economic growth.
In the second quarter, the Philippines grew by 7.5 percent from a year ago, the fastest growth rate in Asia for the period, matching China’s pace of expansion.
This was partly credited to the 10.3-percent growth of the industrial sector, which in turn was driven by the similar growth rate for the manufacturing sub-sector.
“Confidence in the Philippine economy remains sky high, with business investment booming and the government creating a favorable environment for companies.”
Economists said the manufacturing subsector, unlike many others, is capable of employing even people with low levels of educational attainment. Boosting the subsector, therefore, is seen as a key strategy for poverty reduction.
But they said robust growth for the manufacturing sub-sector over the short term would not be enough. It is crucial that the Philippines sustains growth over the medium to long term if poverty incidence is to be substantially reduced, economists said.