Manila: Implementing comprehensive reforms that address barriers to job creation and strengthen household resilience will help the Philippines reduce its poverty rate to below 3 percent and become a predominantly middle-income class society by 2040, a World Bank report said.
According to Philippines News Agency, the World Bank's "Building the Filipino Middle Class: Towards Resilient Futures and Poverty Eradication" report highlighted significant progress made by the Philippines, with the poverty rate having fallen to 15.5 percent in 2023 from 23.5 percent in 2015. Income inequality has also decreased to its lowest level in four decades.
"These are not minor statistics. They represent millions of Filipino families who have moved out of poverty and into better lives," World Bank Division Director for the Philippines, Malaysia, and Brunei Zafer Mustafaoglu said during a briefing at the World Bank's office in Bonifacio Global City. Mustafaoglu credited the gains to deliberate policy choices, including the expansion of social protection through the Pantawid Pamilyang Pilipino Program (4Ps), investments in infrastructure, and job growth in services and construction.
World Bank senior economist Liliana Sousa emphasized the significance of this progress, noting improvements in the Philippine economy that allowed workers to transition from agriculture to better-paying jobs in sectors such as transportation, construction, and commerce.
Despite the achievements, the report noted that almost 28 percent of Filipinos remain vulnerable or at risk of falling back into poverty. The secure middle class, representing economically secure households, has also seen minimal growth since 2018. Additionally, 61 percent of the population is at risk from climate-related disasters, and many families lack savings or insurance.
The World Bank's report outlined two potential futures based on economic modeling. In a business-as-usual scenario, the poverty rate could be reduced to 6 percent, and the secure middle class could increase to 43 percent from the current 23.8 percent. However, under a comprehensive reform scenario, poverty could decrease to as low as 2.9 percent, and the middle class could rise to 55 percent, aligning with the country's Ambisyon Natin 2040 vision.
Sousa stated that the right policies could achieve poverty eradication and the establishment of a middle-class society by 2040. The report called for creating better jobs, strengthening resilience, and improving public services to achieve this vision. It also emphasized the importance of enabling more women to participate in the workforce.
To bolster resilience, the report recommended updating the 4Ps program and extending its coverage to vulnerable households. It also suggested enhancing agricultural insurance and adjusting agricultural spending to lower food prices sustainably, benefiting the poorest families. The World Bank highlighted the need for quality public services in health and education for lasting poverty reduction. Strengthening local capacity and addressing data silos were also urged to maximize the efficiency of government spending.
"When we simulate this, we find that by 2040, with policies in place, with policies that support growth, with policies that support job creation, the country will be able to reach the Ambisyon Natin 2040 goal of a predominantly middle-class society, 55 percent in the secure middle class by 2040, and poverty rate of only 2.9 percent," Sousa concluded.
