RP growth reducing poverty, WB reports

from the Manila Standard Today

By Roderick T. dela Cruz

ECONOMIC growth in the Philippines has been reducing the number of poor Filipinos, the World Bank says in a report.

It says the number of people living on less than $1 a day in the Philippines went down to around seven million, or 8.1 percent of the population, this year from 8.1 million or 9.6 percent last year.

And the number of Filipinos living on less than $2 a day fell to 32.4 million—or 37.5 percent of the population—this year from 34 million or 39.9 percent last year.

The Bank says the figures are expected to improve further in 2008, when the number of Filipinos living on less than $1 a day drops to 6.9 percent of the population, and those living on less than $2 a day falls to 35.2 percent on the back of a 6.7-percent growth in the gross domestic product in 2007 and 6.2 percent in 2008.

Despite the improvement, the Philippines still has one of the largest populations of poor people compared with Malaysia, Thailand and Vietnam, the Bank says.

It suggests that urbanization is not a guarantee for poverty reduction, noting that Thailand and the Philippines were at similar levels of development and poverty levels in the early 1980s.

While the Philippines urbanized more rapidly than Thailand, Thailand was able to reduce its poverty levels faster, and what this means is that urbanization efforts must be matched by investment in rural development for rapid poverty reduction.

“Urbanization by itself will only stimulate rural-urban migration and exacerbate problems of urban unemployment, congestion and urban poverty,” the Bank said.

It cites econometric evidence from the Philippines showing that growth in agriculture results in more poverty reduction than growth in industry.

Still, the Bank says 2007 should mark a milestone for poverty reduction in the whole of East Asia, with the number of people living below $2 a day in the region now estimated to have fallen below 500 million for the first time, down from an estimated 540 million in 2006 and over 1 billion in 1990.

“Poverty declines are widespread across countries, including both low-income economies such as Cambodia, Laos, Papua New Guinea and Vietnam, as well as middle-income economies such as China, Indonesia and Thailand,” the Bank said.

It says strong economic growth—reaching an estimated 10.1 percent for developing East Asia in 2007—is providing the underpinning for poverty reduction.

But it notes that based on individual country experiences, poverty in the region is now overwhelmingly a rural problem, with poverty declining unevenly.

“And even as poverty continues to fall in the aggregate, it is often the case that lower-income groups experience slower income growth than higher-income ones, resulting in widening income inequality,” the Bank said.