HIGHER MANUFACTURING GROWTH. RCBC chief economist Michael Ricafort says on Friday (Nov. 10, 2023) the Philippine manufacturing sector could grow at a faster pace once inflation further eases. Manufacturing output both in value and volume grew by 8.9 percent and 9.1 percent in September. (PNA file photo)
MANILA – The country's manufacturing sector could post a double-digit growth if inflation further eases, an economist said on Friday.
"Manufacturing growth has been lingering at single-digit levels in recent months [as] higher inflation and higher interest rates since 2022 dragged manufacturing activities," Rizal Commercial Banking Corporation (RCBC) chief economist told the Philippine News Agency in a Viber message.
Latest data from the Philippine Statistics Authority (PSA) shows that manufacturing output both in volume and value continued to grow in September this year.
The value of production index grew by 8.9 percent, while the volume of production index also expanded by 9.1 percent.
Ricafort said a double-digit growth in manufacturing is possible, given the further reopening and recovery of many businesses, such as tourism and other hard-hit industries during the pandemic.
"Manufacturing growth could also post double-digit growth rates again once inflation eases further and eventually the Fed and other global and local central banks start to cut rates especially later in 2024, provided that geopolitical risks do not widen further, especially the Israel-Hamas war," he said.
To temper the rising inflation, the Bangko Sentral ng Pilipinas has so far raised interest rates by a total of 450 basis points since last year.
Inflation, which accelerated to 6.1 percent in September, decelerated to 4.9 percent last month.
Ricafort said lower interest rates would help boost investment and manufacturing activities, as well as generate more jobs and other economic activities.
"Further growth in manufacturing [is] also structurally a function of more net foreign direct investment inflows into the country, amid various investment commitments from overseas trips of the administration since the latter part of 2022," he said. (PNA)
