The strong growth of manufacturing sector in January indicates the economy can withstand global shocks this year, the Finance Department said over the weekend.
Finance Undersecretary and chief economist Gil Beltran made the comment after the volume of production index, which represents the output of 20 largest industries, soared 34.3 percent in January from a year ago. This was the highest growth rate recorded since 2010.
“The robust manufacturing sector is an indication that our domestic economy can withstand the impact of external volatilities. Despite the slowdown of our major trading partners and continued oil price crisis, the country managed to stabilize our major economic indicators,” Beltran said in an internal economic bulletin.
The country’s gross domestic product grew 6.3 percent in the fourth quarter, bringing the full-year growth to 5.8 percent in 2015. The growth figure, however, was below the government’s target of 7 percent to 8 percent.
Economic managers revised downward the GDP growth target for 2016 to a range of 6.8 percent to 7.8 percent from the previous 7 percent to 8 percent, amid lingering threats to the global economy.
Manufacturing expanded 6.6 percent in the fourth quarter and 5.7 percent in the whole of 2015, slower than the 8.3-percent expansion in 2014.
Beltran said to achieve the 2016 GDP growth target, the government should continue the public-private-partnership projects and enforce free trade agreements to provide a more conducive business environment to attract local and foreign investors. Beltran said these factors were essential to sustain the positive economic growth.
“Despite the on-going El Niño [dry spell], food sector recorded a significant improvement from the previous months’ performances. The continuation of programs such as cloud seeding and irrigation to most affected provinces is vital to lessen the adverse effects of the drought,” Beltran said.
“The government can also provide additional training to farmers towards a more technology-based farming that can boost crop production. The government should also intensify its measures to prevent the spread of the Newcastle disease in the poultry industry and provide alternative livelihood to fishermen affected by the dry spell,” he said.
The National Economic and Development Authority said the growth in the manufacturing sector started strong in 2016 as production of chemical products and food manufactures expanded in January.
The value of production index also recovered from a consistent decline since April 2015, as it posted a 26.5-percent growth.
The average capacity utilization remained at 83.5 percent for the fourth consecutive month, with basic metals posting the highest utilization rate of 88.4 percent.
Among manufacturing companies, 25.9 percent operated at full capacity (90 to 100 percent), 56.4 percent at 70 to 89 percent of capacity and 17.7 percent operated at below 70 percent of capacity.