Recent typhoons in the Philippines have negatively impacted both the manufacturing sector and inflation. The Volume of Production Index (VoPI) contracted in November 2024, with the food manufacturing sector experiencing the steepest decline. The typhoons also led to job losses, particularly in the agriculture sector, and contributed to rising prices.
Warehouses and factories in Meycauayan, Bulacan, contribute to the country’s growing manufacturing sector, which saw a rise in factory output. Key industries, including electronics, transport equipment, and food products, have driven this increase, reflecting the resilience and continued expansion of local production capabilities. \The successive typhoons experienced by the country in the last quarter of 2024 also affected the manufacturing sector’s performance, according to Moody’s Analytics.
In its latest economic brief, Moody’s Analytics said the latest manufacturing data released by the Philippine Statistics Authority (PSA) showed the Volume of Production Index (VoPI) contracted 4.2 percent in November 2024. The PSA’s data showed the food manufacturing sector accounted for the highest weight in the index contracted 0.8 percent in November 2024. \“While factory output data in the Philippines tend to be bumpy and subject to major revisions, this latest poor reading is a concern,” Moody’s Analytics said. “Six tropical storms from late October through November brought widespread flooding, which damaged crops. These typhoons arrived after the typical peak season of July through October,” it added. \The decline in food manufacturing in November 2024, PSA said, was the steepest decline posted by the sector since the 12.3-percent contraction posted in February 2024. The VoPI of the food manufacturing sector contracted 3.1 percent in November 2023 and posted a growth of 5.3 percent in October 2024. It may be noted that the typhoons in the last quarter of 2024 also caused the decline in jobs in November 2024. This was led by the Agriculture and forestry sector which saw a 1.99-million year on year decline in jobs, and a 335,000 month-on-month decline. \The recent typhoons have also been cited as the reason for faster inflation. Inflation averaged 2.9 percent in December 2024 and 3.2 percent in 2024.Data from PSA showed the increase in inflation has eroded the value of a hundred peso to P79. This means, Filipinos need to shell out P121 today to purchase P100 worth of goods in 2018. “As real incomes fall, people are getting goods than they did before. Since inflation affects the middle income households heavily, we expect poverty to increase,” Ateneo de Manila University economist Leonardo Lanzona told BusinessMirror. “In the process, this increase in poverty is linked to underemployment as workers will now be looking for secondary jobs. We often associate underemployment with low quality jobs, but we often fail to see that this is also associated with poverty,” he added. \Higher prices and the lower value of the peso will be a challenge for Filipinos, according to Unionbank Chief Economist Ruben Carlo O. Asuncion. This, he said, means the policy challenge moving forward is to keep inflation in check, particularly for food. It can be noted that food has a weight of 34.78 percent in the Consumer Price Index (CPI). National Economic and Development Authority (Neda) Policy and Planning Undersecretary Rosemarie G. Edillon told BusinessMirror that the more important metric than purchasing power is real wages or real income. This, she said, is the reason for Neda’s efforts to “closely monitor” the trend in real wages. Edillon said, based on their monitoring, real wages nationwide has been increasing. However, Edillon said there are factors that complicate the rise in wages and this has to do with changes in preferences. With higher incomes, persons can opt to get better quality products or services which cost more.
MANUFACTURING TYPHOONS INFLATION FOOD JOBS
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