Poverty level seen to drop to 13.5% this year

MANILA, Philippines — The country’s poverty level is expected to ease this year as the labor market improves, according to the World Bank.

“The economy is regaining momentum and these jobs, although lower quality, are expected to spur household income growth and poverty is expected to decline over the forecast horizon,” World Bank senior economist Ralph Van Doorn said in a forum yesterday.

He said poverty incidence in the Philippines is expected to decline to 13.5 percent this year from 17.8 percent in 2021, based on the World Bank’s poverty line of $3.65 per day for lower-middle income countries.

The poverty incidence is projected to ease further to 10.5 percent by 2025.

Van Doorn said many poor households are just above the poverty line and a single shock could push them back.

“So, still we need more poverty reduction and people moving faster away from this low-income level poverty line,” he said.

The World Bank said in its Philippines’ Economic Update June 2023 the projections on poverty incidence could be tempered by higher-than-expected inflation especially as higher food and energy prices can offset the increase in household income from gains in the labor market.

“Proactive measures implemented by the government are crucial to protect the purchasing power of the poor and the vulnerable,” the World Bank said.

It said the creation of the Interagency Committee on Inflation and Market Outlook to provide policy advice to manage inflation shows the government’s commitment to address these threats.

As the country faces the threat of inflation and climate shocks, the World Bank said the government needs to continue measures to mitigate risks and ensure there is enough energy and food supply.

Inflation eased further to 6.1 percent in May from 6.6 percent in April due to the slower increases in transport and food prices.

Average inflation for the January to May period is at 7.5 percent, higher than the Bangko Sentral ng Pilipinas’ two to four percent target.

National Economic and Development Authority Secretary Arsenio Balisacan said earlier the government is confident the inflation target could be achieved this year.