The country’s manufacturing sector manifested signs of recovery in May 2020, the National Economic and Development Authority (NEDA) said on Tuesday.
This developed amid the government’s decision to gradually lift lockdown measures and allow businesses to resume their respective operations.
A revival in economic activity, however, spurred a sustained increase in prices of goods and services as inflation accelerated in June to 2.5 percent from only 2.1 percent a month ago.
Data from the Philippine Statistics Authority showed that the increase in the transport index particularly reflected the double-digit annual growth in tricycle fare of 26 percent.
With the latest figure, inflation for the first half averaged 2.5 percent, well within the government’s 2 to 4 percent target range and closer to the lower end as predicted by the Bangko Sentral ng Pilipinas (BSP).
NEDA, nonetheless, said clear signs of recovery were seen in the increase of capacity utilization, as reported by the Philippine Statistics Authority in its Monthly Integrated Survey of Selected Industries.
Inflation in the National Capital Region (NCR) grew to 2 percent in June from just 1.4 percent the previous month owing to the 8.6 percent annual hike in the region’s transport index, a reversal from the annual drop of 1.8 percent in May.
Output still down
“While year-on-year Volume of Production Index (VoPI) and Value of Production Index (VaPI) declined by 40.3 percent and 42.1 percent, respectively, in May, they are better than the revised VoPI and VaPI of -43.6 and -45.5 recorded in April 2020,” the economic agency added.
Acting Socioeconomic Planning Secretary Karl Kendrick Chua said such decline in the country’s manufacturing metrics is expected given the imposed strict community quarantine measures, which lasted for around two months and limited the movement of goods and services.
“Demand was also subdued as people’s mobility remains limited. Despite this, we are seeing some signs of resurgence of the sector. As we transition to a new normal, we expect gradual recovery with improvements in logistics, particularly in the transport of essential goods and raw materials,” Chua said.
Infection risks remain
“As more firms reopen, we need to remind everyone that the risk of COVID-19 (coronavirus disease) infection remains. It is very important for firms to strictly comply with minimum health standards to mitigate risks in the workplace. We need to make sure that our workers’ health is not compromised and that we are able to contain the spread of the virus,” he added.
BSP Governor Benjamin Diokno expressed his optimism that inflation will continue to remain within manageable levels moving forward as the latest figure was within their forecast range of 1.9 to 2.7 percent.