Poverty in PHL worsens

Poverty in PHL worsens

WEDNESDAY, 06 JULY 2011 21:36     CAI U. ORDINARIO / REPORTER  


Despite the government’s efforts to expand its Conditional Cash-Transfer Program and implement other projects to help the poor, the Philippines continues to experience some of the worst cases of poverty in the region, according to the World Bank in a study that covered the years 2003 to 2009.
Still, the Bank held out hope for the country, noting the early gains of the Aquino administration in tackling corruption and improving the investment climate.

The study ranked the Philippines slightly better than Vietnam and Cambodia.

In its Philippine Quarterly Update, the Washington-based lender reported that poverty in urban areas was “worsening rapidly” due to increased population and lower incomes.

“Poverty, and especially poverty dynamics, in the Philippines remains worse than its neighbors. Spatially, poverty remains highly concentrated in rural areas and in terms of sectors, households that rely on agricultural income are significantly more likely to be poor than other households,” the bank said.

“From 2006 to 2009, poverty in urban areas increased more rapidly, became more severe, and contributed more to the continuous increase in poverty. Across regions, 10 of the 17 administrative regions experienced an increase in poverty incidence,” it added.

Despite a more resilient economy, some 2.4 million Filipinos became poor from 2003 to 2006 and 1 million more from 2006 to 2009.

With this, the World Bank said compared with other countries in the region, using the international poverty line of $1.25 per day, the Philippines only rates better than Cambodia.

Using the $2 per day poverty line, the Philippines is only better off than Vietnam and Cambodia, it added.

“The Philippines fares lower than Malaysia, Thailand and China. China‘s $1.25 a day poverty had declined dramatically over two decades to a third of what it was in 1993,” the bank said.

Poverty incidence in rural areas is about twice as high as the national average and more than three times that in urban areas, according to the report. The World Bank estimated that poverty incidence in rural areas reached as much as 39.4 percent of the population in 2009, higher than the 13.2 percent of the population recorded in urban areas.

Poverty incidence in rural areas was at 39.5 percent of the population in 2006 up from 38.1 percent in 2003, while poverty incidence in urban areas was recorded at 12.9 percent in 2006 from 11.3 percent three years earlier.

While the poverty gap and the severity of poverty in the Philippines declined over the years in rural areas, it worsened in urban areas.

Poverty gap in urban areas, the report stated, widened to 3.1 percent of the poverty line in 2009 from 2.7 percent in 2003, while it declined to 11.2 percent from 11.6 percent over the same period in rural areas.

“These suggest that although poverty is concentrated in rural areas, poverty in urban areas is worsening rapidly,” the bank said.

One of the ways by which the Philippines can address poverty, the bank said, is by developing the services sector, which has the potential to become a key player in generating decent employment and increasing incomes.

But to unleash the full potential of the sector, the government must first address the constraints to the sector through broad-based policies, it said.

These policies must help provide higher quality education to meet the demand for skills of the sector, improve infrastructure, and remove investment climate distortions that prevents firms from investing.

“The services sector has the potential to play an important role in promoting inclusive growth in the Philippines. The sector is already large and has been an important driver of employment and GDP [gross domestic product] growth,” it said.

Meanwhile, the World Bank said it is maintaining its growth forecast for the Philippines at 5 percent this year and 5.4 percent for 2012 on expectations that investments, private consumption and the services sector will strengthen.

The report, however, said economic growth could be higher as the strong focus and early gains of the Aquino administration in tackling corruption and improving the investment climate could boost domestic investment.

The World Bank said net exports are projected to recover due to a combination of a technical rebound in exports that were affected by Japan’s triple tragedy combined with a potential boost in exports of goods, services, and labor as Philippine companies and workers contribute to the reconstruction of affected areas.

“Prospects on the supply side remain favorable with manufacturing and construction projected to benefit from the end of the trade disruption linked to Japan’s post-disaster reconstruction, as well as the solid growth forecast for the business-process outsourcing,” World Bank Philippines senior economist Eric Le Borgne said.

The World Bank also stated that one year into office, the Aquino administration has taken important reforms toward achieving inclusive growth, which include improving the transparency of the public-sector budget and launching the Public-Private Partnership program to address infrastructure bottlenecks.

“The report recognizes the significance of the reforms undertaken by the administration, and how these measures provide stability as we pursue inclusive growth. This is another manifestation of the thorough scrutiny of public policies and programs we have undergone, and the positive conclusion arrived at after due diligence and study,” Presidential Spokesman Edwin Lacierda on Wednesday.

(With Mia Gonzalez)

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