JOB losses could continue in the coming months due to mobility restrictions imposed in May, according to a local think tank.
The latest Market Call report stated that combined with the 2.1 million jobs lost in April, the continuation of job losses could crimp consumer spending and threaten economic growth in the second quarter.
First Metro Investment Corporation-University of Asia and the Pacific (FMIC-UA&P) Capital Markets Research noted that consumption spending accounts for 70 percent of the country’s GDP. “Q2 GDP may dampen growing optimism.”
“While some economic indicators (e.g., manufacturing, exports, capital goods imports) point to a possible recovery (or at least an improvement from the Q1’s level), weak April employment data threaten Q2’s economic performance (through consumption-induced effects),” FMIC-UA&P Capital Markets Research said.
“We may see another round of job losses (albeit lower than what was recorded in April) to reflect the mobility restrictions imposed in May onwards,” it added.
The think tank expressed concern that the results of the April 2021 round of the Labor Force Survey (LFS) showed the job losses nearly offset the 2.18 million jobs created in March 2021.
It also noted that all industry sectors reported job losses and showed that the highest decline reached 917,000 jobs lost in the entire industry sector. The agriculture sector shed as much as 570,000 jobs.
“Labor data in April failed to uplift spirits as it showed lower labor force print and higher unemployment rate vis-à-vis the preceding month,” FMIC-UA&P Capital Markets Research said.
However, the local think tank expressed hope that the government infrastructure spending can still boost economic growth.
FMIC-UA&P Capital Markets Research said it expects infrastructure spending to continue increasing given “adequate fiscal space.”
This after the Bureau of Internal Revenue (BIR) reported a gain in collections amounting to P219 billion, which represented more than three times last year’s P90.5 billion.
Infra projects
In a recent briefing, Socioeconomic Planning Secretary Karl Kendrick T. Chua said over 3,000 big and small infrastructure projects may be completed by next year.
Chua said 314 of the projects have already been completed as of June 2019 and 2,800 are set to be completed by 2022. These projects are part of the medium-term Public Investment Program (PIP) of the administration.
“With exports gaining traction as the global economy recovers and major developed economies open up, coupled with easing of local mobility restrictions, we see a double-digit increase in exports for the full year 2021,” FMIC-UA&P Capital Markets Research said.
In a recent televised briefing, Trade and Industry Secretary Ramon M. Lopez said the Philippine economy will return to growth path this year due to the projected recovery of exports and the continued expansion of the Business Process Outsourcing (BPO) sector.
Lopez said exports may post a 7-percent growth this year while the BPO sector is looking at a growth of 5 percent this year.
He added the recent growth of the country’s exports and BPO sector are not only due to base effects. He said recent policies on allowing 100 percent operation in these sectors also contributed to the growth.
Image courtesy of Roy Domingo