MORE Filipinos are expected to join the ranks of the unemployed next year, according to the World Economic Outlook (WEO) released by the International Monetary Fund (IMF).
IMF said the country’s unemployment rate is expected to average 4.7 percent this year, which will rise to 5.1 percent next year.
If the unemployment rate breaches 5 percent next year, this will be the highest since 2022, when the unemployment rate averaged 5.4 percent.
“The task for central banks is complicated by the difficulty of estimating with confidence levels of neutral rates of interest and of unemployment, as well as by lags in policy transmission uncertainties associated with forecasting inflation in this environment, and the differing potency of the transmission mechanism across economic sectors,” the report said. “Calibrating monetary policy will require weighing the costs of lowering nominal rates prematurely versus those of delaying too much.”
IMF said the unemployment for 2024 is also expected to grow by an average of 0.1 percentage point over 2022–2024 in advanced economies.
The report said the increase in unemployment is expected to be higher in Canada with a 1-percentage-point increase; the United Kingdom, 0.9 percentage points; and the United States, 0.2 percentage points.
“With wage growth slowing [in the United States], savings accumulated during the pandemic running out, and the Federal Reserve maintaining tight monetary policy, growth is expected to slow in the second half of 2023 and in 2024,” IMF said in its report.
“The unemployment rate is forecast to rise from 3.6 percent in the second quarter of 2023 to a peak of 4 percent by the last quarter of 2024—a lower peak than previously projected [5.2 percent in the April 2023 WEO and 5.6 percent at the time of the October 2022 WEO], consistent with a softer landing than earlier expected for the US economy,” it added.
Philippine Statistics Authority (PSA) data showed the country’s unemployment rate slowed to 4.4 percent in August from the 4.8 percent in July 2023 and 5.3 percent in August 2022.
The PSA said there were 2.21 million unemployed Filipinos in August. This represented a decrease of 468,000 from August 2022 and 60,000 decline from July 2023.
However, higher public sector spending and better external trade would improve the country’s economic growth next year, according to the IMF.
In a statement distributed during the briefing on the 2023 Article IV Mission to the Philippines on Tuesday, the IMF raised its growth forecast for the country to 6 percent from 5.5 percent estimated in July 2023.
For 2023, IMF cut its growth projection to 5.3 percent for this year from the 6.2 percent estimate in July 2023 based on the weaker-than-expected second-quarter growth forecast.
The IMF move is in contrast to the lower projection made by the World Bank on Tuesday. In its latest East Asia and the Pacific (EAP) Economic Update for October, the Bank said the Philippine economy is expected to grow by 5.8 percent next year, down from the initial estimate of 5.9 percent in April.
Image credits: Nonie Reyes