Cutting poverty, UMIC status on hold–for 3 yrs

THE Philippines would have to put on hold its aspirations of reducing poverty further and reaching Upper Middle Income status at least for the next three years as growth is expected to remain anemic, according to the Ateneo Center for Economic Research and Development (Acerd).

In a Foreign Correspondents Association of the Philippines (Focap) briefing on Monday, Acerd Director Alvin P. Ang said the average growth of the country could slow to 4.5 percent at least in the next three years, assuming the government’s current level of response continues.

Ang said this is 1.5 percentage points lower than the country’s historical average GDP growth of 6 percent. He said the reduction in the growth would affect the country’s goals and targets.

“Those goals have to be postponed for now because poverty will likely increase. If you go by SWS [Social Weather Stations] data, it’s possible that poverty will increase by 5 percent by December,” Ang told the Businessmirror in a message.

Ang said it would take around three years before the Philippine economy gets back its “production capacities.” This is going to affect the growth path of the economy.

He said these capacities remain low at this point and would take time to return. He said these are labor, human resource, infrastructure and business capacities.

Ang said in the last Monthly Integrated Survey of Selected Industries (Missi), manufacturing firms were still operating with a capacity of 60 to 70 percent.

“We can see actually that you are incurring capacity losses and the capacity losses, even if the economy all opened up, it’s not going to go back immediately. It’s easier to destroy than to build. Building a house takes months but only days to destroy. If businesses are gone, to bring them back will take time again,” Ang said.

Acerd’s director said these estimates take into consideration the government’s current efforts, including the continuation of the Build, Build, Build (BBB) program.

He said the country’s infrastructure capacities are intact and this could help the economy grow. However, more can be done to

boost the other capacities of the economy.

Flagship projects

EARLIER, Acting Socioeconomic Planning Secretary Karl Kendrick T. Chua said the list of flagship projects increased to 104 as of September from the 100 listed pre-pandemic in February.

Chua said the majority of these projects are ongoing, while 24 projects are still undergoing project evaluation. Project evaluation is conducted by the interagency Investment Coordination Committee (ICC).

Meanwhile, in his presentation, Ang said right now, apart from the pandemic, Filipinos and the economy are faced with challenges particularly with regard to Internet access.

Ang cited data from the National ICT Household Survey (NIHS) which showed 84.3 percent of households with/without Internet access with only 15.7 percent having Internet access.

Data, he said, also showed that 19,168 households do not use computers and 11,741 households access computers via computer shops.

However, Ang said, there are economic sectors that will help prop up the Philippine economy. These include domestic tourism, which has historically been one of the drivers of tourism growth in the country.

He said the Philippines is one of the least preferred destinations compared to its neighbors in Southeast Asia such as Singapore, which has higher tourist arrival numbers than the country.

Apart from this, Ang said the potential growth of the agriculture sector will also be a good way to boost the economy.

He said this is why as early as March 2020, Acerd recommended that the government pour P50 billion or a fourth of the country’s annual agriculture output to subsidize food production.

Last week, Chua said the country’s poverty rate is expected to slightly worsen to around 15.5 percent and 17.5 percent next year.

Chua added that the government estimates unemployment rate could be around 6 to 8 percent next year. This means around 7 million Filipinos will still be jobless next year.

He clarified that if it weren’t for the pandemic, the country was on track to bring down poverty to 14 percent or lower by 2022 from the 16.7 recorded in 2018, when the last Family Income and Expenditure Survey was conducted.