Poverty incidence expected to further decline this year

THE NATIONAL Economic and Development Authority (NEDA) said it expects the poverty incidence to continue to decline if economic growth remains robust and inclusive and if vulnerable sectors such as agriculture are further supported.

“We expect the poverty incidence to go down even further during the second semester, and therefore the full year will be even better,” NEDA Undersecretary Rosemarie G. Edillon said on the sidelines of a briefing last week.

Latest data from the Philippine Statistics Authority (PSA) showed that the Philippines’ poverty incidence, or the proportion of poor Filipinos whose per capita income is not sufficient to meet their basic food and nonfood needs, decreased to 22.4% in the first half of 2023 from 23.7% two years earlier.

This was equivalent to 25.24 million poor Filipinos, lower than 26.137 million two years earlier.

PSA data also showed that poverty incidence across the country fell in 14 of 17 regions in the first half of 2023.

Meanwhile, the subsistence incidence, or the proportion of Filipinos whose income is not enough to buy even basic food, slipped to 8.7% from 9.9% in 2021. This was equivalent to 9.795 million Filipinos, lower than 10.945 million in 2021 and 9.031 million in 2018, respectively.

Ms. Edillon said the poverty rate is historically lower during the second semester of the year due to seasonal factors.

“That’s always been the case for the Philippines, mainly because we get more income during the second half. We have our bonuses… and that means for those who are on the entrepreneurship side, then there’s higher demand for their products during the second half,” she added.

Under the Philippine Development Plan, the government is targeting to reduce the poverty incidence rate to 12.9-13.2% by 2025 and to single-digit levels by 2028.

It also aims to have a “prosperous, predominantly middle-class society where no one is poor” by 2040.

To further reduce poverty, Ms. Edillon said the government must “grow the economic pie.”

“We’re talking about economic growth, income growth, especially of the poor, and then you need to make sure that the poor can participate and benefit from that growth process,” she said.

The government is targeting 6.5-7.5% gross domestic product (GDP) growth this year.

“You also need to make sure that those sectors that will grow can actually employ the poor and the vulnerable sectors. And then of course, very important as well is to make sure that you have the safety nets, so that when shocks come then they will not slide back into poverty,” Ms. Edillon added.

She noted the need to prioritize the agriculture sector in particular, because it is one of the more vulnerable sectors.

“It will still be the agricultural sector that remains vulnerable to weather shocks and even incidents of pests and diseases. We really need to make sure that we increase the resiliency of the sector,” the NEDA official said, citing increased support for crop insurance and production inputs.

Agriculture contributes about a tenth to the economy. In the third quarter, agriculture, forestry and fishing production inched up by 0.9%, slower than 2.1% a year ago but better than 0.2% in the previous quarter.

John Paolo R. Rivera, president and chief economist at Oikonomia Advisory & Research, Inc., said the poverty incidence is also seen to decline further as jobs and income levels continue to recover.

“Standards of living are relatively better in 2023 than in 2022. Poverty is more pronounced in rural agricultural areas. Government can focus on this so we see significant improvements in poverty, agricultural performance and employment generation that will lift people out of poverty,” he said in a Viber message.