The Philippines’ industrial output rose in September compared to that in the same month last year, indicating that the country’s economic growth momentum is continuing.
According to the data released Thursday by the National Statistics Office, the country’s industrial production, which measures the change in the total inflation-adjusted value of output produced by manufacturers, mines and utilities, rose 8 percent in September compared to that in the same month last year, up from 4.5 percent in August and above analysts’ expectation of 3.1 percent.
This report comes after it was reported earlier this month that the Philippines' rate of inflation continued to decrease in October from the previous month, indicating that the country’s inflationary pressures are well contained, providing room for further monetary easing policy measures required to boost economic growth.
The rate of inflation fell to 3.1 percent in October compared to the same month last year, down from 3.6 percent in September, according to the data released Tuesday by the National Statistics Office. Core inflation, which excludes food and energy items, fell to 3.6 percent in October down from 3.8 percent in September. The diminishing inflation should be good news because it can help the government invigorate growth without much concern about the rising prices.
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Last month, Bangko Sentral ng Pilipinas (BSP) cut its key policy rate by 25 basis points to an all-time low of 3.5 percent, citing benign outlook for inflation and worries over growth prospects. The cut was the fourth since the start of the year and takes total cumulative easing since the start of 2012 to 100bp.
The central bank has its next meeting in December. Investors expect that the rates will be left unchanged in the meeting as the BSP takes time to monitor the impact of last month’s cut. However, if the global growth remains as weak as expected over the next year and the crisis in the euro zone continues to intensify, further loosening is likely in 2013.
Market players sense that medium-term growth prospects would be more favorable if the increased political stability stimulated the private sector growth and the administration's fiscal consolidation program enabled higher levels of public investment in the Philippines.