THE number of Filipinos who will be lifted from poverty is expected to increase on the back of expectations that the Philippine economy will post faster growth, according to the World Bank.
In a Macro Poverty Outlook (MPO) for the Philippines, the Washington-based lender said however, that high inflation. which could last until 2024, is expected to erode the purchasing power of Filipinos.
“While economic growth is picking up, the threat of inflation can erode these gains. Since food and energy account for about 70 percent of household expenditures for the poor, the sharp price spikes will erode their purchasing power,” the World Bank said.
Based on World Bank estimates, using the $2.15 in 2017 purchasing power parity (PPP), poverty incidence in the country is expected to average 2.7 percent this year; 2.2 percent next year; and 1.8 percent in 2024.
Using the lower middle-income poverty rate of $2.15 in 2017 PPP, the country’s poverty rate is forecast to average 17.1 percent this year; 15.2 percent in 2023; and 13.4 percent in 2024.
The World Bank also said that, using the upper middle-income poverty threshold of $6.85 in 2017 PPP, the country’s poverty incidence will be at 52 percent in 2022; 49.6 percent in 2023; and 47 percent in 2024.
The Philippines is vying to become an upper middle-income country (UMIC). Based on the Atlas Method, which also considers exchange rates, an UMIC has a per-capita income estimate of between $4,256 and $13,205 and $13,205 or more for high-income economies.
Based on the World Bank’s country classification, the Philippines remains a lower middle-income country which has an average per capita income of between $1,086 and $4,255 in 2021.
“Risks to the outlook are titled to the downside. Externally, geopolitical tension including a prolonged war in Ukraine could heighten market uncertainty and temper investment prospects. A sharper-than-expected slowdown in advanced economies, the country’s main exports destination, will dampen exports,” the World Bank said.
On the domestic front, the World Bank said high commodity prices are expected to dampen the country’s growth prospects this year and next year.
The MPO estimated that inflation in the Philippines will average 5.2 percent this year before slowing to 4.2 percent in 2023 and 3.9 percent in 2024.
The national government had the same expectations in the sense that inflation is expected to be on track by 2024. (Full story: https://businessmirror.com.ph/2022/09/23/inflation-induced-price-hike-of-some-commodities-may-prevail-until-2024/)
“Domestically, persistently high inflation could compel households to cut expenditures on health and education. Food security may be challenged amid low productivity in domestic agriculture. Climate-related disasters pose a risk to lives and livelihoods and may impose additional fiscal costs to the government,” the report stated.
In order to cope, the World Bank said the national government must diversify its sources of key food commodities. This can be done by sourcing food from other producers through importation.
This, the World Bank said, will augment any shortfall in local production and allow Filipinos to have affordable and accessible food sources.
The Washington-based lender said this should be accompanied by targeted social protection measures “to mitigate the adverse impact of shocks on the poor and vulnerable population.”
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