The Philippine economy’s recovery continues to face challenges but improvement in the unemployment rate makes growth prospects promising, Bangko Sentral ng Pilipinas Governor Benjamin Diokno said Tuesday night.
In a Viber message to journalists, Diokno said results of the July 2021 Labor Force Survey show signs of economic recovery given the decrease in the unemployment rate to its lowest since the pandemic hit, although challenges remain as indicated by the decline in the labor force participation rate and the rise in underemployment rate.
“With the government’s accelerated deployment of vaccines, aggressive infrastructure development, and continued push for vital economic reforms, the Philippines’ medium- and long-term growth prospcts remain promising,” he said.
On Tuesday, the Philippine Statistics Authority (PSA) reported that the unemployment rate went down to 6.9 percent in July from 7.7 percent in the previous month.
However, the labor force participation rate also declined to 59.8 percent in July from 65 percent in June, resulting in a net job loss of 3.4 million from June to July, which was traced to concerns over COVID-19.
The underemployment rate also rose to 20.9 percent in July from the previous month’s 14.2 percent, primarily due to an increase in the underemployment rates in areas outside the National Capital Region.
Diokno dubbed the drop in labor force participation rate and the uptick in underemployment rate as short-term challenges to the recovery process.
He said the central bank has implemented measures to help lift the economy from the impact of the pandemic and these include the reduction in the BSP’s key policy rates by a total of 200 basis points to a record low of 2 percent for the overnight reverse repurchase (RRP) facility rate and a cut in the banks’ reserve requirement ratio (RRR) by as much as 200 basis points.
Diokno said the BSP’s total liquidity infusion in the financial system to date amounts to about PHP2.2 trillion.
“The BSP will continue to support the economy for as long as necessary, until we see evidence of robust and sustained economic recovery, as reflected in part in the employment situation,” he said.
Diokno noted that monetary authorities “are committed to help the Philippines build on its nascent economic recovery, toward a better post-Covid-19 economy.” “This is consistent with the BSP’s primary objective of maintaining price stability conducive to a balanced and sustainable growth of the economy and employment,” he added.*PNA