Posted on April 03, 2016 07:30:00 PM
By Keith Richard D. Mariano
LOCAL FACTORIES continue to expand their production despite external headwinds, the Finance department’s chief economist said, as imports of capital goods and raw materials continue to increase.
“The continued increase in imports of capital goods and raw materials suggests robust manufacturing output ahead,” Finance Undersecretary Gil S. Beltran noted in an internal economic bulletin dated March 28.
Latest data from the Philippine Statistics Authority show merchandise import payments increased 30.8% to $6.825 billion in January from the $5.219 billion booked a year earlier.
The increase reversed the 25.8% contraction last December and a 13.1% decline a year earlier. This also marked the fastest recorded in over five years, following the 35.6% increase logged in November 2010.
Capital goods, raw materials and intermediate goods accounted for about 76% of the country’s total import bill in January. The importation of capital goods alone increased 80.4% year on year to $2.573 billion.
Mr. Beltran noted that electronic inputs continued to receive the biggest demand, accounting for 32.4% of the total and rising 67.1%. Also, the value of metal products shipped into the country surged 73.9% during the period.
“These growth rates imply robust electronics exports and construction,” he said.
Aside from the rising importation of capital goods and raw materials, the above-50 reading of the Philippine Purchasing Manager’s Index supposedly signals the expansion of the manufacturing sector amid “external headwinds.”
“Given this development, the government should tap alternative sources of inputs to diversify risks brought by uncertainties in the international economy,” Mr. Beltran said.
The Philippines can apply for membership in free-trade agreements to access new markets. The government can also intensify efforts to develop and promote drought-resistant crops to ensure enough inputs for food manufacturing.
The El Niño phenomenon, which the Philippines continues to experience, could hurt agriculture production, Mr. Beltran noted.
The economist, however, said the 79.5% increase in rice imports signified the precautionary measures the government takes to sustain the country’s requirement for rice amidst the continued dry spell.
Mr. Beltran further noted the importation of election-related materials is expected to boom in the coming months.
“The increase in pulp and waste paper products by 105.9% year on year can be attributed to the election as the materials may be recycled and used as printing paraphernalia,” he added.