MANILA, Philippines – The Christmas season did not bring the traditional yuletide boost to the country’s manufacturing sector, underscoring the need for government support, the chief economist of the Department of Finance said.
“Manufacturing has not been able to capitalize on robust demand during the Christmas season. Robust domestic demand should have boosted manufacturing output,” Finance undersecretary Gil Beltran said in an economic bulletin dated Dec. 21.
The Volume of Production Index, which measures the amount produced by the manufacturing sector, declined 2.3 percent in September and 1.8 percent in October.
The October drop, in particular, was a big turnaround from the 8.7 percent growth recorded in the same period a year ago. The industry segment, where manufacturing is included, accounted for 32.4 percent of economic output in the third quarter.
Beltran said natural disasters could have derailed the holiday boost that comes with increased consumer spending, thereby prompting firms to replenish supplies.
In particular, he pointed to the 15.7-percent decline in food manufacturing volume in October as a result of “slow agricultural output” in areas in Northern Luzon hit by Typhoon Lando.
Lando, whose name was already decommissioned by the government, killed 47 people and left nearly P10 billion in damage to infrastructure and agriculture, official figures showed.
By protocol, the Philippine Atmospheric Geophysical Astronomical Services Administration (PAGASA) no longer uses a typhoon’s name if it causes damage exceeding P1 billion.
“Continued investments in infrastructure will boost the domestic economy and will create an encouraging environment to global and local producers,” Beltran said.
“Immediate repair of infrastructure after a disaster will help in easing recovery and replanting efforts. Infrastructure insurance will help streamline the process,” he added.
Microfinance should also be prioritized, the Finance official said, especially since micro, small and medium enterprises (MSME) do not have the capacity to overcome catastrophes by themselves.
Around 98 percent of Philippine firms are MSMEs, according to data from the Department of Trade and Industry.
“Manufacturers should look for alternative supply options from abroad. Trade attaches should help in the process,” Beltran said.