Economy seen growing at faster pace in Q2

MANILA, Philippines - The country likely expanded at a faster pace in the second quarter with gross domestic product seen returning to the seven-percent growth pace, driven by gains in manufacturing.

Gil Beltran, Finance Undersecretary and the country’s chief economist, said the rise in manufacturing growth to 13 percent from April to June “foreshadows a possible return to seven percent real growth in the second quarter.”

Beltran said the manufacturing industry accounts for 23 percent of the economy. 

This implies that the sector added 1.4 to two percentage points to real GDP growth in the second quarter, Gil said.

Manufacturing output, measured through the volume of production index,  climbed in June with the printing sector leading the growth (153.8 percent).

Other sectors that grew double digits were leather products (40.5 percent), fabricated metal products (39.8), machinery except electrical (26.7 percent), basic metals (24.4 percent), transport equipment (19..8 percent), textiles (15.4 percent) and food manufacturing (13.1 percent).

Manufacturing is one of the key industries that is seen to drive the Philippines growth over the next 20 years.

To combat inflation, the government must attract more foreign companies to invest in the Philippine manufacturing sector, Beltran said.

“The DTI (Department of Trade and Industry) may need to encourage investments in the sector to forestall inflationary impact as inventories drop below manageable levels,” he said.

“Compared to the first quarter, production output in second quarter grew almost thrice the Q1 level while sales increased 1.5 times the first quarter growth. 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,” Beltran noted.

Economic growth slowed down in the first quarter, weighed down by the string of typhoons that hit the country late last year.

Beltran, however, is confident that the economy would bounce back given increased spending by the private sector.

He said the  implementation of several public-private sector partnership projects  and steady flow of remittances would help drive local economic growth.