Low jobless rate to boost consumption

The jobless rate in the Philippines is expected to remain low in the next four years until 2026 and will help the recovery of growth in household spending, which is currently “still low” although showing signs of improvement, according to Fitch Solutions.

The Fitch Group unit’s latest forecast fits in the bigger picture of many countries enjoying significantly strong labor markets post-COVID, which are driven by the rapid recovery of the local and global economies as well.

“While inflation is eroding real gains in incomes, the strong labor market has been a major driver behind the strong growth in consumer spending that we have seen over the past year,” Fitch Solutions said in a commentary.

“However, with many economies now forecast to slow or even enter recession in 2023, we are starting to highlight increasing levels of unemployment as a risk to our consumer outlook in the short term,” it said.

The company describes the Philippine economy as heavily dependent on high employment, especially in the service industry.

“Fortunately the unemployment rate is currently low, at almost 7 percent of the labor workforce in 2023,” it added. “This is down from the 14.5 percent peak reached in 2020 during the height of the pandemic.” INQ