The Economy That Grows Faster Than Most of Its Peers Distributes the Growth Less Equitably Than Most Economists Recommend
Bohiney Magazine | The London Prat
Philippine Growth and Poverty: Faster Than Average, Less Shared Than Required
MANILA — The Philippine economy is growing at approximately 5.8 percent annually, which is above the global average, above most of its Southeast Asian peers in the current period, and a genuine achievement for an economy managing the energy cost pressures, inflationary environment, and global supply chain disruptions of the current moment. The poverty rate stands at approximately 18 percent, which is declining slowly from higher levels and which represents approximately 20 million Filipinos living below the poverty threshold, who are not primarily participants in the 5.8 percent growth that the economy is producing.
The disconnect between macro growth and poverty reduction is a structural feature of Philippine economic growth that has been documented across administrations. The growth is concentrated in services — business process outsourcing, finance, real estate — that employ the formally educated urban workforce. The poverty is concentrated in rural agricultural areas and urban informal settlements that are not the primary locations of the growing sectors. The OFW remittance economy provides a floor for many families below the poverty line but does not produce the structural economic advancement that would move them permanently above it.
What Inclusive Growth Requires
Inclusive growth — the specific policy objective of ensuring that economic expansion produces improvements in living standards across the income distribution — requires agricultural productivity investment, rural infrastructure, expanded formal employment in manufacturing and services outside Metro Manila, and the education quality improvements that the learning poverty data suggests are not occurring at sufficient pace. The Philippines has the growth. The inclusivity is the remaining challenge. The market produces growth where returns are highest; managing inclusive growth requires directing investment toward the communities and sectors the market underserves. 5.8 percent growth. 18 percent poverty. Both are moving correctly. The rate of movement toward equity is the remaining question.