Reaction Paper for February: The Real February Issue

World Bank says Philippine poor do not feel economic gains

abs-cbnNEWS.com

Posted at 02/23/2011 4:29 PM | Updated as of 02/23/2011 10:48 PM

Tweet

Growth seen slowing down in 2011, 2012

MANILA, Philippines – Benefits of the country's economic growth over the years have failed to trickle down to over a third of the population who are poor, the World Bank said in a report released Wednesday.

The Philippine economy grew 7.3% in 2010, the highest in 34 years, aided by the recovery of exports and manufacturing, accommodative monetary and fiscal policies as well as election spending.

However, in its quarterly report entitled "Robust growth, Stubborn poverty", the World Bank said: "For all the macroeconomic resiliency and strength that the Philippine economy manifested in recent years, growth continues to bypass many of the poor."

The multilateral lender noted that implementation of government policies on social protection will be critical in addressing poverty in the next few years, with growth expected to continue.

Economic expansion is forecast to slow down to 5% in 2011, and 5.4% in 2012, in the absence of the government stimulus program and election spending.

But the World Bank said growth could be higher if the investment climate improves.

Trickle-down effect

Latest official poverty data confirmed a disconcerting lack of poverty reduction response to economic growth in the Philippines, the World Bank said.

From 2003 to 2009, an additional 3.3 million Filipinos became poor, pushing the total to 23.1 million. This increase nudged poverty incidence from 24.9% of the population in 2003 to 26.4% in 2006 and 26.5% in 2009.

From 2003 to 2006 and to 2009, average real gross domestic product (GDP) growth reached 5.4% and 4.3%, respectively.

"As these growth rates imply a significant increase in real GDP per capita, it transpires that the distribution of the gains from growth have eluded the bottom fourth of the Filipino population."

However, the World Bank cited a bright spot amid the disappointing poverty numbers: income distribution among the poor improved between 2006 and 2009 as the poverty gap declined.

The lender attributed this to the rapid expansion of the government's conditional cash transfer (CCT) program.

The CCT program operates in 80 provinces, covering 1 million households by end of 2010. For 2011, the program is budgeted to cover 2.3 million poor households, or about 60% of poor households compared with 26% of poor households last year.

"The recent scale-up in the 2011 budget bodes well for the fight against poverty," the World Bank said.

Economic growth drivers

Strong private investments and favorable consumer and business sentiments will help buoy economic growth this year.

The World Bank's 5% growth forecast is below the 7% to 8% target of the Philippine government for 2011.

“Strong private investment in the fourth quarter of 2010 and bullish business confidence are encouraging signs that the economy can attract investments needed to boost potential growth and generate more jobs," World Bank Country Director Bert Hofman said.

Exports are expected to remain strong on the back of a robust electronics industry.

On the supply side, the services sector will remain the main driver, followed by industrial production. Barring any major calamity, the agricultural sector would also contribute strongly to growth.

For 2012, GDP growth is expected to expand by 5.4% as investment accelerates, thanks partly to the implementation of the priority infrastructure programs of the Aquino administration under the Private-Public Partnership or PPP scheme.

Rising oil, food prices

The only factors that could weigh down on growth, however, are rising international oil and food prices.

"These shocks, the report said, could slow the economy down and raise inflation," the World Bank said.

Global oil prices have reached 2-year highs on political turmoil in the Middle East and North Africa. However, government authorities said this would have no immediate impact on local fuel prices as supply remains assured.

On food prices, the World Bank said: "Food prices are expected to rise moderately."

REACTION

            I was riding a jeepney and as it came to a stop a blind man assisted by his wife begged money from us. After a few meters and the traffic light turned red, kids went to our jeepney, and like the first, pleaded for money. When I passed San Pedro Street, I saw more blind men on the street requesting for alms. I also observed that plenty of individuals, even families with babies, sleep on the sidewalk covering themselves with cartons and plastics at night. These sights make me wonder that if we have been progressing, why are these individuals still on the street? Then I read this news and I think I found my answer.

The World Bank’s comment is good to hear that we have progressed economically but at the same time it is disappointing to hear that this growth was not fairly distributed. I then realized that still in the Philippines trend that the rich becomes richer and the poor all poorer is still the same. The number of squatters and homeless even here in Davao are increasing while rich people keep on increasing their properties.

Here is another danger, the increasing prices of oils and food in the global market especially now that there is a conflict between oil-producing countries Middle East and Africa. I cannot imagine how the less fortunate people could cope with that? Even the slightest increase in rice and oil already leads to so many harmful effects on my poor Filipino fellow. What then would happen to us? That is so hard to picture out.

But then on the bright side, I know that the Filipinos will always find a way to live and be happy. Despite the hardships in life, Filipinos have always been positive. Besides, our attraction for investments are strong now compared to the last one. Even the World Bank admits that. Then there are still projects coming our way that will help our economy improve better and help our GDP increase a little like PNoy’s PPP. Filipinos are optimistic so I feel confident that someday, my less fortunate people would improve their living. We can surpass it all.

I believe that what we have to do now is to prove to the World Bank that they are wrong. Easy to say but hard to do. Well, come what may, what matters most is that I am positive and may we all be positive that blessings would come to our country, the corruption would be solved so that the saying the rich become richer and poor become poorer would no longer exist in our beautiful paradise, home of the greats, Philippines.