The growth of the manufacturing sector will likely pick up in the second quarter of the year due to increase in demand, an economist said Sunday. "Seasonal increase in demand towards April-May 2023 in view of the Holy Week holidays, vacation season amid the further pick up in both local and foreign tourism, fiestas, Mother's Day, reunions, and other celebrations during the summer season would lead to some pick up in manufacturing activities and other business activities," Rizal Commercial Banking Corporation chief economist Michael Ricafort told the Philippine News Agency. Data from the Philippine Statistics Authority earlier showed that the growth of volume and value of production eased in March. The Value of Production Index grew by 4.9 percent in March, slower than the 9 percent in February, while the growth of the volume of production eased to 2.2 percent from 5.2 percent. However, Ricafort said the increase in foreign direct investments (FDIs) could help the manufacturing sector grow at a faster pace. FDIs posted net inflows of PHP1.05 billion in February this year. "Foreign direct investments already back to pre-pandemic highs recently could eventually lead to increased manufacturing activities in the country," he said. "Another source of growth for the economy, as well as in the manufacturing sector, would be the country's inclusion into the Regional Comprehensive Economic Partnership (RCEP), which is the world's biggest free trade agreement, led by China, that would help entice more foreign direct investments into the country, as a production or marketing base, or as access point to bigger export market with other RCEP member countries," he added. Ricafort said the easing year-on-year inflation would also lead to lower interest rates, thus easing inflationary pressures and lower financing costs that would support faster growth in manufacturing.
Source: Philippines News Agency