ILO Predicts Unemployment Rate Dips to 6.3% in 2023 Amid Economic Slowdown

Summary

  • The International Labour Organization (ILO) anticipates 6.3% unemployment in 2023, an improvement from 7.2% in 2022 and a significant recovery from the 10.6% unemployment rate in 2020 due to the COVID-19 pandemic.
  • Average unemployment for the first three quarters of this year stood at 6.5%.
  • A potential economic deceleration in the upcoming year could increase unemployment rates, warn the International Monetary Fund and the United Nations’ Economic Commission for Latin America and the Caribbean (ECLAC).
  • ECLAC predicts a modest economic growth of 1.9% for the region in 2023, reflecting a second year of sluggish economic activity.
  • The ILO suggests that a slowdown coupled with lower inflation could still foster job growth, albeit with the creation of informal jobs sans the benefits of formal employment.

Unemployment Forecasts for 2023 and Beyond

The ILO predicts the unemployment rate in 2023 to be 6.3%, a decrease from 7.2% the previous year. This marks a significant recovery from the 10.6% in 2020, amidst the COVID-19 lockdowns. The lowest rate of unemployment since 2014 was recorded in this period, with the rate standing at 6.0% based on past ILO data.

Quarterly Unemployment Rates and Future Estimates

According to the UN organization, the average unemployment rate for this year’s first three quarters stands at 6.5%. Factoring in seasonal impacts on the regional job market, the expected unemployment rate through 2023 stands at 6.3%.

Economic Slowdown and its Impact

An upcoming economic slowdown could potentially raise unemployment rates. Warnings from the International Monetary Fund and the United Nations’ ECLAC indicate a deceleration in growth. ECLAC predicts a mere 1.9% economic growth for the region next year, trailing the 2.2% growth foresight for 2023.

Job Growth Amid Economic Slowdown

In contrast, if lower inflation accompanies the economic slowdown, the ILO posits that job growth could continue. However, this begs the question of the quality of jobs being created, with an anticipation of an increase in informal jobs that lack the usual benefits of formal employment.

The decelerating economic condition and potential uptick in regional unemployment to 6.5% – 6.8% in 2024 might impact currency market dynamics, affecting the valuation of regional currencies and pertinent assets.

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