World Banks Sees PH Poverty Rate To Fall Below 20% Starting 2020
Easing inflation and rising incomes are teaming up to bring poverty rate in the Philippines below 20 percent starting in 2020, according to World Bank projections.
The World Bank’s Macro Poverty Outlook for East Asia and the Pacific released a report this week indicating that the poverty rate is likely to hover within 20.8 percent by end of 2019, down from 26 percent, or more than a quarter of the population, in 2015.
The previous forecasts of the WB had estimated the poverty rates at 24.5 percent in 2016, 23.1 percent in 2017 and 21.9 percent in 2018. These were all projections based on a lower-middle-income poverty line of $3.20 per day. At that threshold, the WB sees the Philippines’ poverty rate further declining to 19.8 percent next year and 18.7 percent in 2021.
The WB report stated that despite a temporary growth slowdown in the first half of 2019, progress on shared prosperity is likely to continue. it also added that income among lower-middle-class households “grew at a much faster pace than the average.” Cash transfer schemes, like the 4Ps, will continue to help cushion the impact of negative shocks. And lastly, it’s likely that the declining trend in poverty will continue.
In the World Bank’s earlier report, it indicated that the 12-year-old conditional cash transfer scheme called Pantawid Pamilyang Pilipino Program (4Ps) played a role in cutting down the nationwide poverty rate by 1.2-1.5 percentage points between 2012 and 2015. It also reduced income inequality by 0.5-0.6 ppt during the same period, according to the same report.
In reflection of this, WB also shared that real wages continue to rise and employment continues to expand towards non-agricultural wage employment.
Based on their latest poverty rate figure, it dropped from 28.8 million below the poverty threshold in 2016 to just 23.1 million Filipinos in 2018. The only time that the gains from higher wage and salary incomes got dampened was in 2018 when inflation was on its 10-year high at 5.2 percent. The record inflation was blamed mainly on a surge in global oil prices and an increase in rice prices brought mainly by lack of supply.
The WB also said that continued “high-quality job creation” and “boosting human capital investment” would further boost the impact of economic growth on poverty reduction and “shared prosperity.” Meanwhile, investments and government support for industries and sectors that create “high-quality” jobs are needed to further reduce poverty and inequality. ]
Investments in education, health, and skills development were also needed “for workers to stay competitive in a fast-changing global work environment,” it said.
WB noted that Programs, like 4Ps, need to be improved to “support incomes of poor households and help build their resilience.