‘Growth benefits trickling down to poor takes time’

LIFTING the poor from poverty takes time and has been complicated by the pandemic which cost the economy three year’s worth of growth, according to the National Economic and Development Authority (Neda).

In a briefing on Wednesday, Socioeconomic Planning Secretary Arsenio M. Balisacan said it has taken the economy 1.5 years to get back to its 2019 growth level.

In 2019, the economy amounted to P19.38 trillion, but it was only in 2022 when it got back to this level at P19.94 trillion. This made 2023 as the first year after the pandemic when the country really grew its GDP, which averaged P21.05 trillion.

“The growth we’re seeing in the last one and a half years, [that’s just to] recover . . . what we lost, we practically lost three years of economic growth,” Balisacan said.

“It will take time because if your income is only P10,000 a month that will increase 4 percent, 5 percent; could you buy now? And your traffic and your motorcycle? Of course not. At the very least, you can improve by a little more of your basic needs,” he stressed.

Based on the data, per capita GDP reached P186,496 in 2023, higher than the P180,661 per capita GDP posted in 2019. Per capita GDP growth in 2023 was at 4.3 percent and was slower than the 6.2 percent posted in 2022.

Balisacan said only steady growth can improve the lives of more poor Filipinos. He said the Philippine Development Plan 2023-2028 aims to bring down the country’s 16 percent poverty rate to 9 percent.

But even then, this means there will still be poor people by 2028, the year the President leaves office. Using the latest estimate of 109.2 million Filipinos as of 2020, this means there will still be close to 10 million Filipinos living below the poverty line.

“[We must] sustain the growth over the next several years and more importantly, we have to make sure that that growth is also inclusive. That it’s happening across sections of our society and not just among the privileged few and that’s why and how the PDP is is designed; it is an inclusive growth paradigm,” Balisacan said.

Local economists agreed with Balisacan, saying the path to a more inclusive economy is a long and hard one. One way to ensure that growth treads this direction is investing in human capital.

Ateneo de Manila University economist Leonardo Lanzona told Businessmirror that investing, especially in poor Filipinos, will ensure a more inclusive economy and society. This means giving them the necessary education, training, health, housing, mobility, and nutrition.

Investing in poor households, Lanzona said, requires a comprehensive plan and cannot be done piecemeal or through certain sectors only, with expectations that it will lead to maximum returns in the long run.

“By developing a comprehensive human capital formation strategy, we can achieve an efficient and dynamic workforce which can attract physical capital and thus achieve inclusive growth,” Lanzona told this newspaper on Wednesday.

“Of course, this takes time, but the ultimate deadline is the completion of a demographic transition which comes from human capital investments and results in a situation where the majority of the population is at their working ages. These will allow us to benefit from demographic dividends which comes only once in a country’s history,” he explained.

Meanwhile, De La Salle University economist Maria Ella Oplas told Businessmirror there is no “fast route” to attaining inclusive growth. In order to lift millions from poverty, structural changes are crucial.

Oplas said these changes cannot be made only at the national level. Local governments must also do their part because that will help bring in investments.

These investments, Oplas said, will bring secure and high income employment opportunities needed by Filipinos to move up the income ladder.

“Employment lifts people from the unfreedom of poverty.

It empowers us to have high self esteem and freedom to make decisions that will make us feel the growth,” she said.

For his part, University of Asia and the Pacific economist Victor A. Abola said “inclusive growth cannot be measured on a year to year basis.” As such, faster economic growth that can reduce inequality is never easy.

Abola said the government has been doing this, given its focus on inland growth versus earlier coastal areas, urban centers. He also stressed that foreign exchange will also play a crucial role.

“Create jobs by having a competitive foreign exchange rate. I estimate [the Philippine] peso to be overvalued by 30 percent. [Removing] even half that [overvalue] over three years will be good,” Abola told Businessmirror.

Earlier, ADMU Department of Economics Chairperson Alvin P. Ang said if the government is keen on making the economy more inclusive to allow a greater number of Pinoys to take part in the country’s growth story, it must be willing to temporarily sacrifice fast GDP growth.