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By Darwin G. Amojelar And Chino
S. Leyco
, Reporters
The Asian Development Bank
reported that the Philippines is no longer the economic laggard in
Southeast Asia but warned that Filipinos who are out of poverty may
slip back into poverty.
ADB Deputy Director General for
Southeast Asia Thomas Crouch said so on Wednesday, adding that
because of rising fuel and food prices, a number of Filipinos have
already slipped back into poverty.
The Philippine economy grew in
2007, despite the government’s decreasing budget deficit to about
1 percent of gross domestic product (GDP), Crouch said.
With a high 7.3-percent growth in
2007, surpassing those of other countries in the region and after
managing inflation, the Philippines “is no longer the laggard”
of Southeast Asia, said Crouch.
“It is approaching the average
[of economic growth] of the region as a whole,” he said, adding
that Manila must not fritter away its gains by handing out broad
subsidies and price controls amid pressures brought about by soaring
food and energy prices.
He warned that assistance to the
poor should be carefully targeted to the most disadvantaged sectors
and cautioned against resorting to subsidies that might increase the
deficit with only minimal help to the poor.
Growing poverty
Government data showed that the
country’s poor had risen to 27.6 million people from 23.8 million
in 2003, owing to insufficient rise in personal income, high oil
prices and rapid population growth. The ADB is also concerned about
growing unemployment and higher prices of oil and food.
The Manila-based multilateral
institution is forecasting the economy to grow 6 percent in 2008 and
by 6.2 percent in 2009.
There is also the issue of
“credibility” among foreign lenders and investors for the
government to maintain its commitments to balance its budget as
“investment partners now regard this as a litmus test of
credibility,” Crouch said.
“The challenging external
environment in 2008 will temper growth,” all over Asia, he said,
citing rising food and oil prices and the economic slowdown in the
United States.
The Philippines has an economic
management team that is “competent, capable and committed” that
had started a “virtuous cycle,” which had brought down interest
rates and kept inflation low, further encouraging investment.
Inflation concerns
World Bank economists on Tuesday
also cited the Philippines’ economic performance, forecasting GDP
growth of 5.9 percent and 6.1 percent for 2008 and 2009,
respectively. But they warned that the country’s window of
opportunity to sustain such growth will not remain open for long.
Crouch said inflation will only
have a “slight uptick” in 2008, while other countries in the
region will see larger jumps.
The National Statistics Office in
February reported that prices of rice went up to 7.7 percent; corn,
5.2 percent; cereal preparations, 9 percent; dairy products, 11.8
percent; eggs, 8.3 percent; fish, 7.9 percent; fruits and
vegetables, 11.1 percent; meat, 4.4 percent and miscellaneous foods,
4.1 percent.
“With regards to the rising
prices, the key elements I see here is that [government] needs a
calibrating response on who do you want to protect,” Crouch said.
“Do we need to protect the multi-hundred thousand salaries, or do
we need to protect those in poverty? My view is that [the
government] should protect those under more economic stress than the
upper side of the economy.”
The National Statistical
Coordination Board earlier reported that in six years from 1997 to
2003, for every 100 middle-income families, three have declined into
the low-income category.
As of 2003, the statistical board
said less than 1 percent of families belonged to the high-income
class, about 20 percent are part of the middle-income group, and
nearly all the rest are in the low-income group.
To protect Filipinos, Crouch said
the country’s economic growth should be more inclusive.
“Growth in itself is good,
sustained growth is better. The best of all is a sustained and
inclusive.”
“We need to work hard to ensure
that dividends are broadly shared,” Crouch said, adding that the
government should ensure safety nets and appropriate interventions
to bring those people out of poverty.
He said to create a more
competitive economy, the government should improve physical
infrastructure, attract more investments and spend more for
education and health.
“These will enable the
Philippines not to insulate itself on what will happen to the rest
of the world,” he said.
An improved fiscal position will
allow government to increase social spending, address poverty and
build infrastructure to encourage employment-creating industries.
The Arroyo government has lately
announced plans to raise infrastructure investment, mainly for
transportation, power and water projects. Still, despite the huge
budget allocation, the ratio of public investment to GDP still
remains low at 2.8 percent.
According to the ADB study,
private investment in buildings is expected to expand, but
investment in the manufacturing sector is likely to remain weak due
to nagging problems in the domestic environment.
“Foreign direct investment, an
important source of funding and technology for manufacturing, is low
compared with countries such as Malaysia and Thailand. Manufacturing
output growth is likely to ease to about 3 percent in view of the
softer external demand,” the study said.
The ADB study rings close to a
country report lately given by the United Nations in the Philippine
Development Forum held in the Clark Freeport Zone last week. The
international body said development does not trickle down to poor
families as distributing fruits from development projects remains
uneven, poverty runs wider, and there are still widespread
disparities across regions and population groups.
Rural poverty
The highest poverty incidences,
estimated at four times that of Metro Manila and accounting for
one-third of the country’s total poor, are found in the Autonomous
Region in Muslim Mindanao (ARMM), Western Mindanao, Bicol and
Eastern Visayas.
“Poverty continues to be a
rural phenomenon,” the UN said, adding that two out of every three
persons in the country live in rural areas and are dependent on
agriculture.
“Poverty incidence among
agricultural communities is roughly three times that of the rest of
the population, and the sector accounts for 60 percent of total
poverty,” the UN added.
Because of widespread poverty in
the rural areas, the UN said migration to urban areas has made the
Philippines the fastest urbanizing country in Southeast Asia, with
55 million of its 86-million population, or 64 percent, living in
urban areas.
Thirty percent of the country
live in slums as rural poverty incidence remains higher in absolute
terms. Urban poverty incidence increased from 17.9 percent in 1997
to 24.9 percent in 2003, while rural poverty incidence declined from
44.4 percent to 35.3 percent during the same period.
Compared with the Philippines’
East and Southeast Asian neighbors, the UN said poverty reduction in
country has lagged far behind Indonesia, Thailand, Vietnam and
China—countries that started with higher levels of poverty
incidence than the Philippines but have successfully managed to
lessen, if not virtually eliminate absolute poverty.
--WITH AFP
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