The Philippine manufacturing sector has declined in volume and value in February 2019, its third month in a row of decline.
The Monthly Integrated Survey of Selected Industries (MISSI) of the Philippine Statistics Authority (PSA) reported that the Volume of Production Index (VoPI) and the Value of Production Index (VaPI) in February 2019 declined by 8.5% and 5.5%, respectively. These figures are in contrast to the double-digit increases in VoPI of 15.2% and VaPI of 15.5% in the same month last year.
PSA said the decrease in VoPI was mainly influenced by the decreases in eight major sectors led by food manufacturing (-19.5%) and non-metallic mineral products (-12%).
The lower VaPI, meanwhile, can be attributed to the falls in the indices of four major sectors, also led by food manufacturing (-21.9%), PSA noted.
“Despite this, the heightened election-related spending will drive up demand for goods and services leading up to May and improve domestic demand in the second quarter of the year. Backed by optimistic business and consumer outlook, this will help the sector bounce back,” National Economic and Development Authority (NEDA) officer-in-charge and undersecretary Adoracion M. Navarro said in a statement.
“Also, easing inflationary pressures bodes well for the overall manufacturing output as rice and other agricultural commodities recorded price declines,” the NEDA official said.
As of February 1, 2019, stocks of commercial and NFA rice have already improved as a result of the timely importation.
“Some provisions of the Rice Tariffication Law such as the imposition of tariff rates are immediately executory to address the issue of supply constraints,” Navarro said, adding that food prices will likely be under control despite domestic supply constraints caused by El Niño.
Navarro, however, warned of the risks that need to be managed.
“El Niño could prolong and further intensify the dry season, and the adverse impacts of this phenomenon could easily feed into a hike in power and water rates, which are essential inputs to the manufacturing sector,” she said.
Navarro also noted that the delay in passing the General Appropriations Act for 2019 could further hold back government investments in priority areas of development in public infrastructure and social services.
“The immediate implementation of a catch-up plan must be pursued once the 2019 budget is passed to regain the government’s spending momentum and at the same time counter the impact of the temporary interruption in the implementation of new projects,” Navarro said.
She added that to minimize the negative impact on economic growth of government operating on a re-enacted budget, certificates of exemption need to be granted to different implementing agencies.