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Philippines recovery may fall behind Asian neighbors
MANILA, Philippines — Philippine economic recovery may fall behind those of other countries in Asia after the “dreadful” labor and industrial data released recently, according to London-based Capital Economics.
The macroeconomy research firm said that with lockdowns eased only gradually, it may be more difficult for the Philippine economy to recover from the collapse in factory output and record increase in unemployment in April.
“With the lockdown being eased only gradually, the recovery in the Philippines is lagging that the rest of the region,” said Capital Economics in a report titled “Philippines: Collapse in April, recovery to lag.”
Last Friday, the Philippine Statistics Authority (PSA) reported that 7.3 million Filipinos found themselves jobless in April, the combined result of restrictions in mobility and the delayed entry of young workers in the labor force.
Unemployment rose to a record high of 17.7 percent, the highest since a rate of 8.4 percent was recorded in April 2005 when a change in the definition of unemployment was implemented.
Capital Economics said that apart from the rise in the number of jobless, those who still worked during the period put in fewer hours because of the restrictions in mobility.
In April 2020, the mean working hours per week fell to 35 hours from 41.8 hours in April 2019.
Factory output, meanwhile, declined to its weakest in 19 years in April, the first full month of the imposition of the Luzon-wide enhanced community quarantine that severely restricted the movement of people and production of goods.
Manufacturing output as measured by the Volume of Production Index (VoPI) declined at a faster pace of 59.8 percent from 7.7 percent in March and 11.8 percent in April 2019. The Value of Production Index (VaPI) also declined at a faster pace of 61.4 percent in April from 12.4 percent in March and 11.8 percent in April 2019.
The April declines in both indexes were the highest since 2001.
“Activity should start to recover over the coming months as factories are reopened. However, the recovery will soon run into constraints from subdued demand and impaired balance sheets,” said Capital Economics.
It maintained its projection that the Philippine economy will contract by six percent this year.
The National Capital Region and several areas transitioned to general community quarantine beginning June 1, allowing more businesses to open more people to return to work.
Source: https://www.philstar.com/business/2020/06/08/2019288/philippines-recovery-may-fall-behind-asian-neighbors