Poverty reduction in rural areas slow, says World Bank


According to the World Bank, rural areas of the country where food is generally grown will lag behind in terms of poverty reduction.

In a virtual briefing on Wednesday, World Bank Philippines Office Senior Economist Kevin C. Chua said the incidence of poverty is expected to decrease to 21% this year and continue to decline through 2024. .

However, poverty reduction will be slower in rural areas where there are fewer employment opportunities compared to urban areas such as the economic centers of Luzon.

“Recent official employment statistics suggest that sectors associated with rural employment recover more slowly than other sectors, indicating that poverty reduction is likely to be slower in rural areas,” Chua said. .

The Philippine Statistics Authority (PSA) said that, based on 2018 poverty data by basic sector, farmers, fishermen and people residing in rural areas are the poorest in the country.

The incidence of poverty among farmers was 31.6% and 26.2% among fishermen. The incidence rate of poverty among people residing in rural areas was 24.5%.

Uncertainties that would also slow down poverty reduction include the ongoing war in Ukraine which has already affected food and fuel prices.

Chua said food for poor households accounted for 64% of total household consumption while cereals accounted for 44%.

“The looming uncertainties over the ongoing war in Ukraine will slow the decline in poverty, mainly due to the direct effect of rising food prices and the ripple effect of rising fuel prices” , Chua said.

Last Tuesday, the PSA reported that inflation hit 5.4% in May due to higher food and transport prices.

This is a 37-month peak in inflation and the highest since November 2018, when inflation averaged 6.1%. (Story here: www.businessmirror.com.ph/2022/06/07/slowing-poverty-war-seen-on-5-4-inflation/)

Safety nets

To help Filipinos cope, Chua said the government needs to improve the targeting of social assistance to households. This will mitigate the negative impact of shocks and the pandemic, including rising prices.

Given the government’s budget constraints, Chua said, aid must be timely and targeted and should prioritize those most in need.

Better targeting mechanisms must therefore be put in place. Chua said one solution is to expedite the use of the Philippine national identification system (PhilSys), which can easily identify recipients of the social safety net.

“There is no single targeting method that is universally preferred or equally effective in all countries, as methods must be adjusted to program objective, data availability and institutional capacity,” said Chua said.

Besides cash transfers, Chua said, efforts to control inflation must continue. This can be done through the use of other monetary tools available to monetary authorities.

This can be combined with the establishment of supply-side measures that support agricultural production through extension services, seeds and the provision of fertilizers.

Chua added that the government’s recent decision to reduce tariffs and remove non-tariff barriers for major food items are measures that can also keep food prices low.

The temporary increase in minimum access volume and lower tariffs on pork imports amid the African swine fever outbreak will also help Filipinos gain cheaper access to food, he said. added.

“It is important to diversify their sources through trade to ensure that local products, where insufficient, are supplemented by foreign supplies,” Chua said. “Food security is linked to the ability to draw on diversified sources, both local and international.


The Philippines is poised to grow 5.7% in 2022 and 5.6% on average in 2023-24 amid growing global uncertainties, according to the Philippines Economic Update (PEU) released today. today by the World Bank. (Story here: www.businessmirror.com.ph/2022/06/08/world-bank-cuts-growth-forecast-for-phl-citing-supply-disruptions/)

Ndiamé Diop, World Bank country director for Brunei, Malaysia, the Philippines and Thailand, said developing measures to reduce the country’s budget deficit and debt will ensure long-term fiscal sustainability.

He said these measures should focus on prudent spending, better revenue collection through public procurement reforms and increased private sector financing to ensure that government allocations for education, health, other services social and infrastructure are not sacrificed.

“The continuity of reforms over the past six years, fostering greater competition and attracting foreign investment, will further boost the country’s growth prospects in the years to come,” Diop said.

“In the context of shrinking fiscal space, authorities can encourage public-private partnerships to support improvements in the country’s infrastructure assuming that the financial risks to the government are managed and the quality of services to citizens is guaranteed. “, he added.

The PEU, however, flagged several risks to the outlook, including rising inflation and geopolitical uncertainty caused by Russia’s invasion of Ukraine.

These risks also include tighter global financing conditions and weaker growth from trading partners such as the United States and China.

As the country has entered a mild phase of the pandemic, the threat of a new outbreak due to the variants is also weighing on growth prospects.

The report says the protracted war in Ukraine and continued sanctions against Russia could further disrupt global economic activity, slow growth in the world’s major economies, and harm trade and financial flows.


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