RemittancesGateway.org

Philippines: Jobless rate rises, remittances ease

Wednesday, 16 December 2009 10:31

Source: The Manila Times
By: DARWIN G. AMOJELAR & MARICEL E. BURGONIO

The number of unemployed Filipinos rose in October, while remittances eased as the Philippines' slow recovery from the worst global financial crisis in decades led the Asian Development Bank (ADB) to trim its growth forecast for the country.

In a statement, the National Statistics Office (NSO) on Tuesday said the unemployment rate rose to 7.1 percent from 6.8 percent in October of last year.

The country's total labor force also dropped to 38.2 million from 38.4 million in July.

The Philippine economy had grown by 0.7 percent in the first nine months of the year, or a tad below the low-end official target range of 0.8 percent to 1.8 percent, because of a weak industry sector.

Of the estimated 35.5 million employed persons in October, the majority at 51.5 percent was employed by the services sector.

"The highest employed workforce in the services sector were in wholesale and retail trade, repair of motor vehicles, motorcycles and personal and household goods," the NSO said.

The second-largest employer during the period was the agriculture sector accounting for 34 percent of the total number of people with jobs.

Only 14.5 percent of the total employed was in the industry sector.

With unemployment rising and a damaging string of typhoons, the ADB cut its economic growth forecast for the Philippines for this year, but kept next year's estimate.

In its latest Asia Economic Monitor, the Manila-based lender said the Philippines is likely to post a one percent gross domestic product (GDP) growth this year, down from an earlier forecast of 1.6 percent.

The ADB said the country's economic performance in the first three quarters "was worse than we expected," adding that "the external environment was not very good to the Philippine economy [while] unemployment [was] high [and had a] negative impact on [domestic] demand."

" The typhoons also dampened growth," Jong Wah Lee, ADB chief economist told reporters in a briefing.
The ADB said the global downturn appears to be affecting the Philippines with a lag.

"The continued soft economic activity into the fourth quarter will likely drag the 2009 growth rate," the lender said.

For 2010, the ADB maintained its growth forecast of 3.3 percent.

"Healthy remittances and government spending are expected to support the Philippine economy," the lender said.

Also on Tuesday, the Bangko Sentral ng Pilipinas (BSP) said remittances by overseas Filipino workers (OFWs) grew by 6.7 percent in October, or slower than the 8.6-percent uptick the month before.

Money sent home by Filipinos abroad grew by 4.5 percent to $14.321 billion in the first 10 months of the year.

"The continued deployment of Filipino workers abroad, particularly skilled and higher-paid workers, has provided support to the steady flow of remittances over the 10-month period," BSP Governor Amando Te-tangco Jr. said.

Remittances started picking up in October as OFWs sent money to settle the second-semester tuition of their school-going relatives. Inflows usually accelerate in the final two months of the year in line with the rise in holiday spending.

Tetangco said the rise in remittances was also because of higher transfers to families whose properties were damaged by typhoons Ondoy and Pepeng.

The ADB said that "fiscal and monetary stimulus [should] remain accommodative where possible to put economies [like the Philippines] on a sound footing."

"A key challenge for each economy will be [to] carefully time when best to rollback the stimulus to ensure sustained recovery but avoid both excessive inflation and hefty fiscal shortfalls," Lee said.

Other risks to the outlook for the region include a short-lived recovery in developed economies—which are markets for many goods produced in emerging East Asia—a slower than expected recovery in private consumption in Asia, and destabilizing capital flows.