“The rise in manufacturing growth from 4.3%… in Q1 to 13% in Q2 foreshadows a possible return to 7% real growth in Q2,” Finance Undersecretary and Chief Economist Gil S. Beltran said in an e-mail to reporters yesterday.
Economic growth slowed to 5.7% in the first three months of 2014 from the 7.7% and 6.3% in the first and fourth quarters, respectively, of 2013, largely due to the impact of calamities last year like super-typhoon Yolanda (international name Haiyan) that devastated parts of central Philippines on Nov. 8-9. The government has set a 6.5-7.5% growth target for this year.
With the current pace of growth of the manufacturing sector — which accounts for about 23% of national output — Mr. Beltran believes the economy could bounce from the first-quarter slowdown.
Last week, the Philippine Statistics Authority (PSA) reported that factory output increased by 13.3% year on year in June, picking up from the 8.9% rise recorded in the same month last year.
Mr. Beltran noted that manufacturing growth in June was “broad-based,” with 14 out of 20 monitored sectors registering growth.
PSA noted that printing led all sectors with an increase of 154.8%, adding that “sectors with two-digit annual rates were: leather products (40.5%), fabricated metal products (39.8%), machinery except electrical (26.7%), furniture and fixtures (26.7%), basic metals (24.4%), transport equipment (19.8%), textiles (15.4%) and food manufacturing (13.1%).”
Contraction was observed in non-metallic minerals, footwear and wearing apparel, tobacco products, rubber and plastic products, miscellaneous manufactures, and paper and paper products.
The June result came in the wake of revised 13.4% and 12.2% for May and April, respectively. Before that, factory output grew 1.2% in March, 6.9% in February, and 4.7% in January. Factory output growth averaged 4.3% in January-March, growing threefold to 13.0% last quarter. “Compared to the first quarter, production output in Q2 grew… thrice the Q1 level, while sales increased 1.5 times Q1 growth,” Mr. Beltran noted. “This means that the sector continued to draw down from inventory as in the first quarter. Replenishment of supply is necessary soon to avoid price increases.”
He said the sector likely contributed 1.4-2.0 percentage points to the second-quarter GDP growth, which the government is scheduled to report on Aug. 28. – Daryll Edisonn D. Saclag