Healthy factory output keeps outlook bright

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THE COUNTRY’S manufacturing sector continued to show robust growth last year, sustaining the optimism of its potential in generating employment and promoting inclusive growth.

The sector’s output growth based on gross value added (or GVA, at constant 2000 prices) expanded 7% for the entire 2016, up from the 5.7% recorded in 2015, data from the Philippine Statistics Authority (PSA) showed.

Most of the manufacturing subcomponents registered growth with double-digit increases seen in office, accounting and computing machinery (with a 43% growth), basic metal industries (40.5%), machinery and equipment except electrical (24.9%), transport equipment (24.4%), rubber and plastic products (24.4%); wood, bamboo, cane and rattan articles (18.5%); and electrical machinery and apparatus (12.5%).

Food manufactures, which made up more than a third of manufacturing GVA, grew 8.2% in 2016, an improvement over the 1.6% figure in 2015.

Analysts have long emphasized the importance of manufacturing’s “spillover effect” to other industries as a means to achieve sustained and inclusive growth, with the sector said to provide productive jobs to semi-skilled and skilled workers.


As a result, the Department of Trade and Industry expected the sector to grow 8-10% each until the end of the government’s term, with Trade Secretary Ramon M. Lopez noting that momentum has been building in the sector since 2013.

Last year, factory output growth based on the PSA’s Monthly Integrated Survey of Selected Industries averaged 11.5%, well-above the 8-10% target.

“The Philippines is now on the verge of economic transformation; while services [sector] was the main driver of growth in the past decades, manufacturing has been playing an important role and has been contributing substantially to economic growth since 2013. In the third quarter of 2016, manufacturing grew by 6.9%, more than one percentage point higher than the rate posted in the same period in 2015 (5.8%),” Mr. Lopez said in his speech to delegates of the Manufacturing Summit at the Makati Shangri-La in November last year.

Mr. Lopez added that from 2013 onwards, third quarter manufacturing growth was 7.3% outpacing that of services which grew at an average of 6.7%.

Moving forward, Mr. Lopez said that the Trade department will focus on industries where the country is said to have comparative advantage in employment generation with manufacturing being one of the department’s priority sectors along with agribusiness, information technology-business process management, tourism, and infrastructure and logistics. — Jochebed B. Gonzales