2024 jobless rate lowest in 19 years

Unemployment fell to its lowest in 19 years in 2024 and job quality also improved to its best showing over the same period, the Philippine Statistics Authority (PSA) reported.

The country's jobless rate edged down to 3.1 percent — equivalent to 1.63 million Filipinos — in December, from 3.2 percent a month earlier, while underemployment, which counts those looking for more work or an extra job (5.48 million for the month), picked up to 10.9 percent from 10.8 percent.

This led to full-year unemployment and underemployment hitting 3.8 percent and 11.9 percent, which National Statistician Claire Dennis Mapa said were the lowest since 2005.

He attributed the yearend gains to a seasonal demand for labor during the holidays that saw a total of 50.19 million Filipinos with jobs in December, or an employment rate of 96.9 percent.

The services sector continued to account for the bulk of jobs with a 60.5-percent share of the employed, followed by agriculture (21.3 percent) and industry (18.3 percent).

The transportation and storage and construction sectors added the most jobs during the month at 555,000 and 263,000, respectively.

Agriculture and forestry, on the other hand, shed 1.56 million in a reflection of the continued impact of a series of severe storms that battered the country in the fourth quarter.

Wage and salary workers comprised the majority of those with jobs at 63.1 percent in December, followed by the self-employed without any paid employees (28.5 percent), unpaid family workers (6.8 percent) and employers in own-family operated farms or businesses (1.6 percent).

The private sector provided most of the wage and salary jobs with a 78.9-percent share and the government and state-owned firms accounted for 14.4 percent.

Youth employment, however, fell to 90.9 percent in December from 90.6 percent a month earlier.

The overall labor force participation rate (LFPR) — a measure of the working age population who are actively looking for jobs or are employed — slipped to 65.1 percent from 66.6 percent in December 2023.

The youth LFPR fell to 31.9 percent from 35.5 percent while that for women dropped to 54.7 percent from 56.3 percent, which the National Economic and Development Authority (NEDA) respectively attributed to schooling and household responsibilities.

Socioeconomic Planning Secretary Arsenio Balisacan said that it was "crucial" to sustain economic growth and provide higher-earning opportunities for Filipinos.

"The government remains committed to advancing both supply- and demand-side measures that will foster a more dynamic labor environment...," he added.

"To align with workforce trends and industry demands, the government is promoting more inclusive work arrangements that meet the needs of individuals from diverse backgrounds, reducing barriers to labor force participation," the NEDA chief also said.

The Department of Finance, meanwhile, said the annual unemployment and underemployment rates were the lowest since the PSA began compiling comparable data in 2005.

It noted that the annual jobless rate of 3.8 percent was below the 4.4- to 4.7-percent set in the 2023-2023 Philippine Development Plan and the 2028 target of 4.0-5.0 percent.

Finance Secretary Ralph Reco said the government was "focusing heavily" on education, infrastructure and human development improvements to make the Filipino workforce globally competitive.

Press-Release-for-December-2024-LFS.pdf

Download PDF • 359KB

Source: Manila Times

Philippines unlikely to hit yearly GDP target for the second time in a row

The Philippines may have difficulty achieving the upper end of the government’s 6-8% gross domestic product (GDP) growth target amid heightened global uncertainties this year.

"The country could hit 8% growth this year", Finance Secretary Ralph G. Recto

said, “6-6.5% [growth] is doable for 2025.”

Mr. Recto, however, said the outlook will depend on “inflation, interest rates, and strength of US dollar.”

The Philippine economy expanded by 5.6% last year, slightly faster than 5.5% in 2023 but fell short of the government’s revised 6-6.5% target.

The National Economic and Development Authority earlier said the GDP growth was hampered by extreme weather events, geopolitical tensions, and subdued global demand — which is now considered as the “new normal.”

Multilateral lenders World Bank and the Asian Development Bank project the Philippines to grow by 6.1% and 6.2% in 2025.

Ateneo School of Government Dean Philip Arnold “Randy” P. Tuaño said the Philippines will “face difficulty” meeting the 8% growth target.   

“It was relatively easy to achieve a 7% to 8% growth in the 2022-2023 period as we have been coming from a low-income base during the pandemic,” Mr. Tuaño said.   

“Even then, 5% to 6%, while a respectable rate of growth, would make it difficult to achieve significant growth in income among the middle class and vulnerable in the next few years,” he added. 

HSBC economist for ASEAN Aris D. Dacanay said that achieving an 8% growth rate is possible, but “a tall order.”

He cited global and domestic headwinds, including a sluggish Chinese economy, tariff risks, and climate-related impacts on the agricultural sector.

“This isn’t to say the Philippines won’t grow. Growing by 6.3%, we expect it to be one of Asia’s top performers in 2025 with the business process outsourcing sector (BPO), digitalization, and household consumption — sectors of the economy that are not subject to tariff risks — leading the charge,” he said.

In a note, Citi downgraded its 2025 GDP forecast to 5.9%, from 6% previously, after the weaker-than-expected growth momentum in 2024.

“Still, recent activity data such as income remittances  continue to suggest that domestic demand would remain well-supported. Commercial bank loans rose 11.1% year on year in November 2024 suggesting robust business activities and consumption growth…

Furthermore, continued monetary easing and more moderate inflation are also expected to support domestic demand expansion in 2025,” Citi said.

MORE INVESTMENTS NEEDED

Mr. Recto said the upper end of the government’s target “can only be achieved if private investments double or triple.”

Department of Budget and Management (DBM) Principal Economist Joselito “Jojit” R. Basilio said the economy is likely to post 6-7% growth this year, although the upper end of the target “remains doable under certain circumstances.”

“Aside from the government’s continued ramping up of spending on public construction, recently approved PPPs (public-private partnership) projects should complement the aggressive ‘Build Better More’ program,” he said.

“But there are conditions that can push the economy to do more and grow by 7% to 8% in 2025,” he added.

Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said hitting the upper end of the 2025 goal is a “long shot, realistically.”

“This would require more foreign and local investments, more tourists especially foreign, more merchandise exports that all generate more jobs and other economic opportunities that lead to higher per capita income,” he said.

To drive faster growth this year, Mr. Tuaño said the government should accelerate infrastructure projects and push regulatory reforms to boost investments, especially outside of the main urban centers.

The government should also invest in human resource development via education, healthcare, technological upgrading, and boost small businesses to drive growth, he said.

“Some potential opportunities for growth include stronger consumption driven by remittance growth and continuous expansion of services, and also the rebound of tourism,” Mr. Tuaño said.

Citi said continued policy easing by the Bangko Sentral ng Pilipinas will support GDP growth this year. It maintained its expectation for a 25-basis-point (bp) rate cut this month.

“We expect the BSP to cut again in June and August, skipping April, partly to ascertain a few outcomes, including the potential increase of US tariffs and possible impact on global trade and US dollar-Philippine peso, the Fed’s rate cut decisions, the Philippines’ midterm election campaigning’s potential positive impact on domestic demand (although investment may see some delays from the 45-day pre-election ban on project disbursement) etc,” Citi said.

The Monetary Board has cut benchmark borrowing costs by a total of 75 bps since it began its easing cycle in August 2024, bringing its key rate to 5.75%.

Mr. Basilio said private consumption is expected to recover strongly, increasing by 6% in 2025 due to stabilized inflation and lower interest rates.

“The domestic demand is also anticipated to shift from ‘being subdued’ to one of gaining its momentum,” he said.

Mr. Basilio also noted that agricultural output is anticipated to make “a strong rebound” this year.

However, Mr. Dacanay said relying on fiscal and monetary policy to boost growth will be difficult.

“The government is in the midst of consolidating its fiscal resources from the pandemic, while the Federal Reserve puts a floor under how much the Bangko Sentral ng Pilipinas can cut policy rates to boost growth,” Mr. Dacanay said.

RISKS TO THE OUTLOOK

Analysts cited geopolitical tensions and uncertainty as one of the downside risks to the Philippines’ economic outlook.

“Downside risks include geopolitical risks and uncertainties in global trade markets, considering further that goods export sector performance has been relatively anemic,” DBM’s Mr. Basilio said.

Mr. Tuaño said other downside risks include slower export growth due to “tariff escalation in the developed world… and natural disasters taking a toll on productive labor and capital.”

On the other hand, key upside risks include improved labor market conditions and election spending.

“For the current year, election spending is expected to result in increased economic activities, including advertising and campaign-related expenses in transport, hospitality, retail trade and others,” DBM’s Mr. Basilio said.

Source: Business World

Vibrant private sector engine of high and sustained growth

The Philippines needs to support its private sector by eliminating barriers to allow it to leave the middle-income economy category, the World Bank (WB) said.

At the Anti-Red Tape (ARTA)-World Bank Forum on Monday, World Bank Global Indicators Group Director Norman Loayza said middle-income countries will need about 5% per capita gross domestic product (GDP) growth to transition towards an advanced economy.

“Countries that are in the middle-income category, such as the Philippines, need about 5% of GDP per capita growth in order to escape what is called the middle-income trap,” Mr. Loayza said.

He said that the Philippines has achieved 3.4% per capita GDP growth in the last decade.

“This shows a gap, actually, between what the country should be growing at and how it has grown in the last 10 years,” he added.

“The key to escape this middle-income trap and to actually accelerate growth is the private sector. When you have a private sector that is dynamic, vibrant, and innovative, then you have growth,” he added.

He said in every country that has succeeded in developing its economy, the private sector has been the engine of growth.

“This is what we want to happen for the Philippines and for all developing economies,” he added.

He said that the government needs to support the growth of the private sector.

“And they can do it not by interfering, but actually by removing barriers. For instance, what ARTA does is removing red tape and putting enablers that facilitate business activity. These enablers are the public services that are essential for the private sector to grow,” he added.

These include having good roads, good infrastructure, protection against crime, and digital processes.

“All of these are important in the way that the government can provide support for the private sector to be that engine (of growth),” he added.

For the Philippines, he cited the need to focus on business entry, market competition, and business exit.

He said that focusing on the three will allow “most productive firms to remain and grow and the least productive firms to leave the economy and release resources and space so that other firms can enter, hire more workers, and therefore allow for higher growth.”

“The main goal really is to create good jobs for young people. The Philippines is going through a demographic transition and is blessed by having so many young people, potential workers. Many countries have used that demographic dividend in order to grow faster,” he added.

For its part, ARTA Secretary General Ernesto V. Perez said that it is set to launch the B-READY Reform Guidebook on May 21.

“It will be a guidebook … and we have formed working groups that we have formed into clusters so that all the 10 topic areas will be duly covered,” said Mr. Perez.

He said that the working groups will be composed of both government agencies and the private sector.

“As I emphasized earlier, we need stronger private-sector collaboration because we all know that the primary driver of economic growth is really the private sector; the government is simply there to provide the enabling environment,” he said.

“To implement those massive reforms, we need the support of the private sector under a whole-of-nation approach … This is needed not only to generate jobs and not only to have more foreign direct investment, but to really improve the lives of our countrymen,” he added.

Source: Business World