Economic growth alone is not enough to solve the Philippines’ poverty problem, a World Bank economist said, noting vulnerabilities that need to be addressed.
In a presentation at The Manila Times 3rd Business Forum on Tuesday, World Bank lead economist Rogier van der Brink said Philippine economic growth now seemed to be more inclusive, with government data showing that poverty incidence had dropped to 25.8 percent in 2014 from 27.9 percent in 2012.
“It used to be the case that poverty was quite sticky … Now, we see this first sign of spring,” he said, adding that current initiatives had put poverty reduction targets within reach.
Still, van der Brink said vulnerabilities in the certain areas of the economy were continuing to hinder poverty reduction. These include rural regions where most of the poor population are concentrated; conflict-stricken and geographically isolated areas where poverty is chronic; and low education and agriculture productivity.
“Growth may be necessary, but it is not sufficient, to ensure poverty reduction,” he stressed.
The World Bank economist said the government’s inclusive growth agenda should focus more on structural transformation in agriculture; the role of small and medium enterprises in the economy; the potential of the shipping industry; and reforms in rice policy and taxes.
Van der Brink said a focus on agriculture would help reduce poverty by raising farmers’ profits, lower prices of food and move workers to the manufacturing sector, among others.
In shipping, he cited the recently signed Republic Act 10668 or Foreign Ships Co-loading Act, which allows foreign ships to load and unload imports and exports along domestic routes.
“It will help reduce costs for importers and exporters and it will also aid in decongesting ports within the country,” he said, adding that to address competition, Philippine shipping firms could partner with international companies and enter regional and international markets.
With regard to rice policy, van der Brink said the government should remove quantitative rice import restrictions and a licensing system. He also recommended that the government invest in research and development; agricultural extension; rural infrastructure, roads, irrigation, and electrification; securing property rights; and improve farmers’ health and education to increase productivity.
The World Bank economist said the drop in poverty incidence was supported by falling unemployment and underemployment, at 5.7 percent and 17.6 percent as of October 2015, respectively.
He pointed out that sustaining current economic growth and the poverty reduction trend placed the government’s poverty incidence target of 18 percent to 20 percent in reach.
“And if the trend is sustained over the long run, poverty can be eradicated within one generation. Sustaining growth of 5 percent to 6 percent per year is enough to double per capita income within one decade, raise it by five times in two decades, and by 11 times in three decades,” he said.