WB: Phl strides vs poverty reduction

The Philippines has made remarkable progress in reducing poverty, but income inequality remains high, the World Bank said Thursday.

In its latest report titled "Overcoming Poverty and Inequality in the Philippines: Past, Present, and Prospects for the Future," the World Bank attributed the significant gains in poverty reduction in the Philippines to high growth rates and structural transformation.

"Driven by high growth rates and structural transformation, the poverty rate fell by two-thirds — from 49.2 percent in 1985 to 16.7 percent in 2018," the report said.

It added: "By 2018, the middle class had expanded to nearly 12 million people and the economically secure population had risen to 44 million."

However, despite the progress in reducing the poverty, the World Bank said income inequality remains high in the country, leaving much room for transformation.

Inequality in the Philippines peaked during the 1997-1998 Asian financial crisis and then began a sustained decline that accelerated in 2012-2018, according to the report.

"Yet it is still high: with an income Gini coefficient of 42.3 percent in 2018, the Philippines had one of the highest income inequality rates in East Asia," it added.

The World Bank said the wealthiest 1 percent of earners capture 17 percent of national income all those in the bottom 50 percent collectively receive only 14 percent.

With an income Gini coefficient of 42.3 percent in 2018, the Philippines had one of the highest rates of income inequality in East Asia.

"The Philippines aims to become a middle-class society free of poverty by 2040, but we know from global experience that no country has managed to make this transition while maintaining high levels of inequality," said Ndiamé Diop, World Bank Country Director for Brunei, Malaysia, Philippines and Thailand.

He added: "Inequality of opportunity and low mobility across generations wastes human potential and slow down innovation, which is crucial for building a competitive and prosperous economy that will, in turn, improve the well-being and quality of life of all Filipinos."

The report also mentions the effects of the two-year Covid-19 pandemic on the country's effort to alleviate the plight of the marginalized sectors.

"Despite the strong recovery of growth and the labor market, the Covid-19 pandemic has partly reversed decades-long gains in reducing poverty and inequality in the Philippines," it said.

"It halted economic growth momentum in 2020, and unemployment shot up in industries that require in-person work. In 2021, the national poverty rate rose to 18.1 percent despite government assistance," it added.

The World Bank also underscored that recovery across Filipino households is uneven as the poorest who suffered the most from the pandemic have yet to fully recover their incomes.

"With food prices going up, many families coped by reducing their consumption, including eating less," the report said. "These coping strategies can have serious consequences on the health and nutrition of children in these vulnerable households.