Philippines - Growth in Philippines fails to reduce poverty, income gap

The International Monetary Fund ( IMF) has said that although the Philippines had managed to get its economy grow over the past decades, poverty reduction in the country has remained limited.

In a recent report, the Washington-based multilateral institution urged the Philippine government to implement measures so that economic growth would be inclusive and its benefits could trickle down to the poor.

The IMF said that in the last decade, poverty has in fact slightly increased. Poverty incidence in the country rose from 24. 4 percent in 2003 to 26.4 percent in 2006 and to 26.5 percent in 2009.

The multilateral agency urged the Philippine government to allocate more state funds for social services, such as health and education, in order to spread the benefits of a growing economy. The government should also invest more on improving human capital so that individuals from poor households would have the opportunity to employment, thus get out of poverty, it said.

The IMF report validated a survey taken from Dec. 3 to 7, 2011 by the Social Weather Stations (SWS) that found the proportion of Filipino families experiencing involuntary hunger at least once in the past three months at 22.5 percent, or an estimated 4.5 million families.

The latest hunger rate was 1 point higher than 21.5 percent ( estimated 4.1 million families) in the previous quarter.

The SWS, a reputable local survey firm, said hat the measure of hunger refers to involuntary suffering because the respondents answer a survey question that specifies hunger due to lack of anything to eat.

But Social Welfare Secretary Corazon Soliman has downplayed the SWS survey, saying that the increase was only one percentage point and if the margin of error plus or minus three percentage points used in the survey is applied, there was really no increase in hunger rate. The increase in hunger incidence was recorded in areas hit by disasters, he added.

But, the IMF said that although a growth rate of 5 percent in the Philippines for the medium term was respectable, the country has to grow at a much faster pace to make economic growth translate to poverty reduction.

In its annual review of the Philippine economy, the IMF forecast growth would rise to 4.2 percent this year, up from the sluggish 3.7 percent growth in 2011. Last year's growth was lower than the government's 4.5-5.5 full-year growth forecast and very much below the record 7.6 percent growth in 2010. Growth over the next two years could recover to around 5 percent, while inflation was likely to remain within the 3 to 5 percent official target range.

Government economic managers have expressed confidence that the country's economy would grow by a faster 5-6 percent this year.

The Standard & Poor's Ratings Services has also forecast a 4.2 percent GDP (gross domestic product) growth for the Philippines this year.

In a report entitled "Asia-Pacific Sovereigns: Mixed Outlook in an Uncertain Year," the S&P said that Philippine growth will continue to rely heavily on "domestic consumption and healthy remittance inflows, and which faces headwinds from decelerating exports."

The rating agency, in the same report, said that countries in the Asia-Pacific are expected to project a "fairly mixed picture" in the next 12 to 18 months.

"Our expectation of continued, albeit slower, economic growth in 2012 is one reason for the stable outlook on a majority of Asia- Pacific sovereign ratings. However, we expect the challenging global outlook to be complicated by domestic political issues in the year ahead," S&P said.

On Wednesday, the S&P also reiterated the likelihood of the Philippines getting a credit-rating upgrade this year, citing the improving fiscal position of the government and the country's growing economy.

The country's credit ratings with S&P and Moody's Investors Service both stand at two notches below investment grade, while that with Fitch Ratings stands at a notch below.

Xinhua

Luo Yuan

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