Recovery of job losses due to pandemic may take until 2022 – ADB
Metro Manila (CNN Philippines, July 23) – The worst is over for the economic slump this year, but the Asian Development Bank said bringing back millions of jobs lost during the pandemic could take at least two years.
ADB Country Director Kelly Bird told reporters Thursday that the pandemic plunge likely bottomed out in May as businesses have gradually reopened, but said the second quarter recession "will clearly be a deep one."
The economy contracted for the first time since 1998 in the first quarter, reeling from the Taal volcano eruption and the first two weeks of the Luzon-wide lockdown. Strict stay-at-home rules, which paralyzed the local economy and forced businesses to go dark, were in place for two months before authorities decided to allow more industries to reopen late May.
Metro Manila and Calabarzon, which account for two-thirds of local output, have also been among the hardest hit by local outbreaks.
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Bird said there may be a soft rebound in July-December, but this will not be enough to pull 2020 back to growth. ADB believes the economy may contract by as much as 5.3 percent this year, worse than its previous 3.8 percent estimate and definitely wider than what the government expects. The best case scenario is a narrower 2.3 percent contraction.
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The rebound would not be as quick as the economic team predicts, with Bird saying it will track a U-shape rather than a sharp, V-shaped recovery. A 6.5 percent growth is expected for 2021, but the economist said there's still a lot of uncertainty which renders the outlook more fragile.
However, this would not be felt as fast by the millions of Filipinos who lost their jobs due to the public health crisis, which has hit tourism, retail, and the services sector the hardest.
According to ADB's projections, the 17.7 percent unemployment rate logged in April could go as high as 22 percent in June –– which would be about 2 million more Filipinos –– before rising back up.
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By 2021, joblessness could return to below 10 percent and decline slowly, but it will lag behind growth. The rest of the hirings will occur by 2022 to return at pre-pandemic levels. Prior to the crisis, unemployment was at record lows.
Bird added that the revival of consumer confidence, additional government spending to respond to the slowdown, and an improvement in global trade in the next six to 12 months will be crucial to economic recovery.
