The manufacturing sector continued to decline in June, although at a slower pace from the previous month; thus the slight improvements in its performance suggest signs of recovery, the National Economic and Development Authority (NEDA) said.
The Philippine Statistics Authority reported yesterday the year-on-year volume of production index (VoPI) declined by 19.3 percent while the value of production index (VaPI) fell by 22.5 percent.
The figures in June posted faster declines versus the contractions of 9 percent and 7.7 percent, respectively, in the same month last year, as economic activities remain limited with quarantine measures in place to address the spread of the coronavirus disease 2019 (COVID-19).
However, both of the indices performed better than the VoPI of -28.5 percent and VaPI of -31.2 percent recorded in May 2020.
Expansions in petroleum products, wood and wood products and chemical products tempered the decline of total manufacturing production.
Moreover, NEDA pointed out the three-month moving average growth rate of VoPI (-28.9 percent) and VaPI (-31.6 percent) are significantly lower compared to the previous month’s average of -24.9 percent and -28.1 percent, respectively.
“The declining trend has slowed down in June 2020, which reflected the gradual easing of quarantine restrictions,” Karl Kendrick Chua, acting socioeconomic planning secretary, said in a statement.
The rate of decline for most of the construction-related manufactures was slower compared to the previous month, NEDA said.
It added the easing of various community quarantine measures in many parts of the country permitted the continuation of several public and private construction projects. Construction activities were allowed to resume subject to minimum public health standards and social distancing measures in the workplace.
However, the country’s manufacturing performance is still expected to be adversely affected by the ongoing pandemic in the near term, Chua said.
“The return to Modified Enhanced Community Quarantine (MECQ) in these areas is a difficult but important decision. Although this is expected to weigh down on the economy in the short term as resumption of business operations is limited, this will give our health system some respite amid the recent rise in COVID-19 cases,” Chua said.
“It will also help improve productivity in the near-term as more lives are saved and consumer confidence restored,” he added.
Chua is referring to the government’s decision to shift back Metro Manila, Laguna, Cavite, Rizal and Bulacan to MECQ, from a general community quarantine, for 15 days as health care workers called for a timeout amid the increasing number of COVID-19 cases.
Chua added with the rising COVID-19 cases in the country, the strict enforcement of containment measures by both government and the private sectors need to go hand in hand with the efforts to gradually reopen the economy to ensure that jobs and income are protected.
“The administration will pursue the swift passage of the Bayanihan II bill. The bill allocates P50 billion to government financial institutions as capital infusion for the grant of low-interest loans and credit guarantees to micro, small and medium enterprises,” Chua said.
“It will also support strategically important and distressed firms. The bill also allocates P90 billion to support the healthcare system and the hardest hit sectors through targeted subsidies,” he added.
Chua also said the government aims to assist in improving the resilience of business establishments under the new normal by providing technical assistance on business continuity planning and capacity building on new competencies, such as digital skills, digitalizing operations and entrepreneurial mentoring, among others.