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Unemployment
develops favourably
Unemployment
indicators show that the economy continues to develop favourably.
According to the National Statistical Institute (INE), unemployment
dropped to 14.2% in August, which was down from 15.3% the prior month and
well below the 17.8% observed in the same month last year.
In August, the annual average unemployment rate reached 16.1%,
which represented a 0.3 percentage point improvement over prior month.
To a large extent the current downward trend in unemployment is
attributable to the recovery in the labour-intensive construction industry,
which has experienced two consecutive banner quarters of double-digit
growth.
Outlook
remains favourable but growth likely to moderate
Consensus
Forecast participants expect the current healthy pace of economic activity
to moderate, despite favourable prospects for continued high oil prices at
least through the end of this year.
Gross domestic product (GDP) growth is seen as decelerating to less
than half the pace of the second quarter at 5.4%.
Furthermore, growth is anticipated to slow further in the final
quarter to 3.0%, as the stronger comparison base of last year begins to
kick in.
Nevertheless, full year GDP growth is seen as reaching 11.9%, which
is up 1.5 percentage points from last month.
The current Consensus Forecast figure is now well above the 9% to
10% government estimate.
Next year, however, the moderating growth trend of the second half
of this year is likely to carry over, as the economy is anticipated to
expand at a much more moderate 4.1%, up a 0.6 percentage points from last
month’s Consensus Forecast estimate.
Consumer
prices
remained subdued amid controls
In
September, consumer prices rose 0.52%, which was down from the 1.34%
increase observed the prior month and represented the lowest monthly
increase since February 2001.
Education and health costs were the main factors offsetting a more
modest price rise, as virtually all other sectors experienced moderate
increases.
As a result of the September reading, annual inflation dropped from
21.9% in August to 20.8%.
Despite the favourable September figure, Consensus Forecast
panellists expect annual inflation to accelerate by the end of this year,
as a potential exchange rate devaluation would raise pressure on domestic
prices.
As a result, inflation is seen at 22.8%
by the end of the year.
Inflationary expectations, however, continue to improve, as shown
by the 3.3 percentage point downward adjustment to the inflation estimate
by panellists over last month’s forecast.
Moreover, at its current level, the Consensus Forecast figure is
now below government’s 26.0% estimate.
Next
year, however, the Consensus expects inflation to rise to 25.2%, which is
also down 3.0 percentage points from last month. |
