Philippines jobless rate seen to drop this year

MANILA, Philippines — The country is expected to post lower average unemployment rate this year from last year, but the jobless rate could rise to over five percent next year, according to United Kingdom-based think tank Pantheon Macroeconomics.

“Based on our comparatively downbeat forecasts for GDP (gross domestic product) growth, we reckon that the average unemployment rate will fall to 4.6 percent this year,” Pantheon Macroeconomics’ chief emerging Asia economist Miguel Chanco and senior Asia economist Moorthy Krshnan said in a report yesterday.

Last year, the average unemployment rate was at 5.4 percent.

For next year, Pantheon Macroeconomics’ economists expect the average unemployment rate to rise again to 5.4 percent.

Data released by the Philippine Statistics Authority last week showed the unemployment rate rose to 4.8 percent in July from 4.5 percent in June.

Economists from Pantheon Macroeconomics expect the Philippine economy to grow by 4.5 percent this year, down from their previous forecast of 5.5 percent, following the slower economic growth outturn in the second quarter.

The think tank’s GDP forecast for this year is way below the government’s six to seven percent growth target.

For next year, Pantheon Macroeconomics expects the economy to post a four percent GDP growth, also down from an earlier forecast of five percent.

This forecast is also lower than the government’s 6.5 to eight percent GDP growth target for next year.

The economy grew at a slower pace of 4.3 percent in the second quarter from 6.4 in the previous quarter and 7.5 percent in the second quarter last year, as elevated prices and high interest rates dampened consumption.

Pantheon Macroeconomicsm said the weak domestic demand in the second quarter had spilled over to the start of the third quarter, based on the latest volume of net sales index (VoNSI) data, which tracks the changes in the net sales of the manufacturing sector.

Growth in the VoNSI remained in the red in July, as it eased to -2.1 percent from the previous month’s -2.4 percent.

While the worst of the decline appears to be over, Pantheon Macroeconomics’ economists said they do not expect growth in the VoNSI to be back in the black anytime soon.

“The details of the sales data showed that discretionary household spending is suffering, barring the relative resilience in vehicle sales,” they said.