THE growth in other countries could benefit overseas Filipino workers (OFWs), as well as the Philippines’s export earnings, according to a local think tank.
In its Market Call report, the First Metro Investment Corp. and University of Asia and the Pacific (FMIC-UA&P) Capital Markets Research said the growth in other countries would “produce positive spillover effects” for the country.
This month, the International Monetary Fund (IMF) said the United States economy is poised to grow 6.4 percent this year while the Middle East and North Africa region is expected to post 4-percent growth. Reports said the Chinese economy posted growth of 18.3 percent in the first quarter, the fastest since 1992.
“Economic growth from other countries would produce ‘positive spillover effects,’ beneficial to OFWs and exports,” FMIC-UA&P Capital Markets Research said in its report released on Thursday.
“The spate of good news should offset a bit the queasiness brought about by the huge increase in Covid cases and the corresponding tightening of restrictions. Nonetheless, the long view seems to favor more positivity,” it added.
Apart from the good news in other countries, FMIC-UA&P Capital Markets Research said the Labor Force Survey in February showed some improvement in terms of jobs generated.
The local think tank said based on the Philippine Statistics Authority (PSA), a total of 1.9 million jobs were created in February compared to January 2021.
How ever, with a larger labor force at 2.1 million, the think tank said, the unemployment rate increased to 8.8 percent in February.
“With LFS done now monthly, policy-makers can make faster adjustments to soften the negative impact of the pandemic,” the think tank said.
Expansion mode
Meanwhile, FMIC-UA&P Capital Markets Research said that while data from IHS Markit Philippines showed the country’s manufacturing PMI sliding to 52.3 in March 2021 from 52.5 in the previous two months, this meant the sector was already in expansion mode.
FMIC-UA&P Capital Markets Research said a manufacturing PMI of above the 50-level means the manufacturing sector was in expansion mode. This indicated an improvement in the health sector wherein output grew fastest since June 2019.
However, the February data from the PSA showed the average capacity utilization rate of the country slowed to 53.8 percent from 56.7 percent in the previous month.
PSA said the proportion of establishments that operated below 70 percent capacity was more than half of the total number of responding establishments.
“Employment remained soft, however, while output inflation apparently moved up fastest since November 2018. Finally, the outlook for production stayed in the positive territory,” FMIC-UA&P Capital Markets Research said.
Meanwhile, the think tank said the 37.3-percent increase in government spending was also a good omen. This was a 10-month high and bodes well for the economy’s recovery.
FMIC-UA&P Capital Markets Research said the lion’s share of the expenses went to primary expenditures as it expanded by 32.9 percent or P75.3 billion from a month ago.
It pointed out that even if the P45 billion of these expenses were removed because this amount went to Government Financial Institutions (GFIs) pursuant to Bayanihan II, there would still be a gain of 18.6 percent.
Under Bayanihan II, GFIs such as the Development Bank of the Philippines (DBP) or the LandBank of the Philippines (LBP) are tasked to provide guarantees to industries and sectors adversely affected by Covid-19.
“NG had a good spending record in February—up 18.6 percent, after deducting P45-billion transfer to GFIs to support troubled MSMEs and sectors badly hit by the pandemic,” the think tank said.
“With its cash hoard, especially after raising P411.8 billion in RTBs [Retail Treasury Bonds] in February-March, we can expect NG [national government] to continue to ratchet spending, especially for infrastructures for the rest of 2021,” it added.
This week, the National Economic and Development Authority (Neda) said over P83 billion worth of income and wages were lost during the recent tighter community quarantine in the National Capital Region (NCR) and its surrounding areas.
Neda Acting Secretary Karl Chua said the two-week enhanced community quarantine (ECQ) in the NCR Plus—Metro Manila, Laguna, Cavite, Bulacan, and Rizal—cost the economy P39.2 billion worth of income and wages based on Neda’s computations.
Meanwhile, he said the country will lose P14.7 billion worth of income and wages per week during the three-week MECQ in NCR plus. The MECQ is expected to last until end-April.
Chua revealed these during the public address of President Duterte late Monday to stress the importance of arresting the Covid-19 case surge nationwide.
He noted that prior to the declaration of the ECQ—the strictest community quarantine classification—in NCR Plus on March 29, 2021, the country’s economy has finally started to recover from the impact of the pandemic.
Around 9.3 million jobs were generated in February, which effectively offset the 8.7 million job losses in previous months and provided a net employment of 600,000, according to Chua.
The economic manager said he hopes the country can minimize the country’s unemployment rate to 4 to 5 percent next year from its current rate of 8.8 percent.