THE country’s unemployment rate may remain “elevated” next year at between 6.7 and 7.6 percent, the Department of Finance (DOF) said on Wednesday.
In an economic bulletin, the DOF said the economic team still sees unemployment rate and poverty incidence as a “major challenge” next year despite their generally positive outlook that the country’s real GDP will return to pre-pandemic levels by then.
Economic managers have estimated that real GDP next year to grow between 7 and 9 percent on the back of the expected resurgence of domestic economic activity.
“In a base case scenario, the unemployment rate can still be within the range of 6.7 to 7.6 percent in 2022,” it said.
This is lower compared to the preliminary annual unemployment rate in 2020 recorded at 10.3 percent, accounting for 4.5 million unemployed Filipinos in the labor force. According to the Philippine Statistics Authority, the unemployment rate recorded in 2020 is the highest so far since April 2005. In 2019, the unemployment rate was posted at 5.1 percent.
The DOF also said they will still work toward attaining the 14-percent target for poverty incidence next year.
However, it said “further measures are needed to reach the original target of 14 percent by 2022 which include transfers to the bottom 50 percent of the population.”
In September last year, House of Representatives Ways and Means Committee Chairman Joey Salceda said he expects poverty incidence to increase to around 24 to 25 percent after the conduct of Family Income and Expenditure Survey (FIES) this year.
Salceda’s projection is higher than the 16.7-percent poverty incidence rate that the country posted in 2018 and the 23.3 percent in 2015.
In terms of medium-term fiscal program, the DOF also said it still expects a gradual increase of total revenues next year to P3.29 trillion, up by 15.1 percent than this year’s level. Of the amount, P3.13 trillion is estimated to come from tax revenues.
However, the DOF flagged the reimposition of two-week Enhanced Community Quarantine in Metro Manila this month as a “downside risk” to these revenue projections.
On the other hand, disbursements are still seen to reach P4.95 trillion in 2022, 4.6 percent higher than 2021 level.
A huge chunk of the 2022 expenditures is allocated to projects aimed at improving health care and social services as part of Covid-19 response measures and building more infrastructure to support economic growth.
Under the proposed P5.024-trillion 2022 national budget as approved by the Development Budget Coordination Committee, the national government’s share is P3.13 trillion while P1.12 trillion will go to local government units in the form of National Tax Allotments.
Around P601.4 billion will be paid as debt service to creditors and the remaining P175.7 billion will be used to support government-owned and -controlled corporations.
The P329.8-billion funding for new or expanded projects for next year’s budget will be prioritized for programs on continued recovery and strengthening country’s resilience post-pandemic through enhancing country’s health system, empowering local government units, and providing a more efficient and inclusive social support and protection.
On top of this, the funds will be also be used for continued procurement and distribution of vaccines to curb the spread of Covid-19, provision of booster shots to those who received the vaccines to further strengthen the immune system, establishment of the Virology Science and Technology Institute of the Philippines, and addressing the prevalent malnutrition problem among Filipino children.
It will also be used to fast-track the Philippine Identification System, and to finance the Growth Equity Fund to aid the poor, disadvantaged and lagging government units as functions and services will be devolved to them in line with the Mandanas-Garcia ruling of the Supreme Court.
Image courtesy of Nonie Reyes