Unemployment seen rising to 8% in 2nd quarter

Eight out of every 100 Filipino workers may end up jobless this second quarter, resulting in the country’s highest jobless rate in 13 years, as the enhanced community quarantine (ECQ) was swallowed as the bitter pill to contain the coronavirus (COVID-19) pandemic.

This will also mark a big jump from the record-low unemployment ratio of 4.8 percent achieved by the Philippines last year, according to Japanese investment house Nomura.

The Department of Labor and Employment (Dole) has estimated the number of workers displaced by the COVID-19 outbreak and the lockdown since mid-March at 1.048 million. Based on this, Nomura estimated that the country’s unemployment rate has hit 7.5 percent.

“We believe the Dole numbers are still likely to rise as these are based on firms claiming assistance under an amelioration program for those affected by the outbreak,” Nomura said in an April 13 research note written by economists Euben Paracuelles and Rangga Cipta.

The whole of Luzon—which accounts for about two-thirds of the country’s economic output—has been locked down for about a month now, while other parts of the country have also started to impose quarantine measures.

With the lockdown period extended by another two weeks to end-April, Nomura projected that the country’s unemployment rate would surge to 8 percent this second quarter of 2020.

“With discussions within government of a supplementary budget still limited, the Philippines appears to be lagging regional peers on urgently needed fiscal measures, so monetary policy will likely provide an immediate response. Indeed, BSP (Bangko Sentral ng Pilipinas) Governor [Benjamin] Diokno hinted last week that an off-cycle decision is possible and added that deeper policy rate cuts beyond 3 percent are warranted,” Nomura said.

Nomura sees the BSP slashing its key policy interest rates by another 75 basis points to 2.5 percent within the second quarter, starting with a 50-basis point cut possibly well ahead of the next scheduled monetary setting on May 21. INQ