The Philippine economy will continue to recover rapidly, albeit slightly milder, highlighting the massive toll from the nearly two years of harsh lockdown and acceleration of the national government’s debt level.
“We still see the economy expand by six percent to seven percent for the entire year. We expect infrastructure spending to accelerate in the second half as the NG fiscal space has expanded with better tax revenues,” The Market Call Capital Markets Research said.
In the first quarter of 2022, the country’s gross domestic product (GDP) expanded 8.3 percent. The easing of Covid-19 restrictions allowed rapid economic activities that allowed the rebound of household consumption spending, which helped drive strong economic growth.
The positive impact of peso depreciation on overseas Filipino workers’ remittances and business process outsourcing (BPO) added that revenues and exports should offset much of the weakness in consumer spending hit by high inflation.
“The peso will likely recover a little because of recent dollar softening and likely lower crude oil prices for the rest of the year,” the Market Call said.
The Market also said that despite the end of elections on 9 May, the job market still looked robust as the economy added 453,000 jobs in May after a significant drop in April (the last phase of the campaign period).
“The Services and Industry sectors provided strong boosts of 725,000 and 357,000 jobs, respectively representing gains of 2.7 percent YoY and 4.2 percent, respectively, to offset the number of persons (-616,000) who exited from Agriculture,” the research added.
Moreover, the unemployment rate increased six percent from 5.7 percent a month ago, but the rise in the labor participation rate to 64 percent from 63.4 percent in May produced that higher figure despite the robust increase in employment, it said.
The Market Call added underemployment rose to 14.5 percent in May, but this proved much better than the average of 15.9 percent in 2021 and 14.7 percent in the first four months of 2022.
The research said that the two significant sub-sectors in the Industry sector, Construction, and Manufacturing, did the heavy lifting with new jobs of 232,000 (+ 5.3 percent) and 90,000 (+2.5 percent), respectively.
The two other sub-sectors, Water, Electricity, Gas, etc., and Mining and Quarrying, had minor job cuts of 8,000 and 3,000, respectively.
The Market Call said that the services sector had the most significant intake of workers despite having only four sub-sectors (out of 13) in the positive territory.