The NEDA (National Economic and Development Authority) recently announced that the poverty headcount in the first semester of 2018 reached 21% as compared to 27.6% in the same period of 2015.
Is it time to celebrate?
During the full year of 2015, poverty incidence was 21.6%. By simple extrapolation, the second semester figure fell to only 15.6%.
INFLATION AND POVERTY
What could be the main causes of the decline? I can speculate. The average food inflation during the first half of 2015 was 4%. It went down to 1.2% in the second half and giving a full year of 2.5%. By contrast, food inflation in 2018 was higher at 5.5% in first half, and worse at 8.2% in the second half. (See Table 1.)
UNEMPLOYMENT AND UNDEREMPLOYMENT AND POVERTY
Meanwhile, unemployment and underemployment slightly worsened in 2015. By contrast, it went down in 2018. (See Table 2.)
In 2015, the poverty incidence dropped dramatically from 27.6% in the first half to an estimated 15.6% in the second half with a 0.8 percentage-point increase in total unemployment and underemployment and a deceleration in food inflation.
Given the high inflation in the second half of 2018, the impact on poverty incidence was severe on poor. In contrast, the 1.5 percentage-points reduction in unemployment and underemployment had a positive impact on poverty incidence. It is likely that poverty incidence had steadied in the second half? At 21%?
Add to that, agriculture growth was anemic: 0.9 percent in 2018 from almost zero in 2015.
In this light, the poverty incidence would have barely moved between 2015 and 2018. That is my crystal ball. The country must work harder to reach the Development Plan target of 14% in 2022.
This article reflects the personal opinion of the author and does not reflect the official stand of the Management Association of the Philippines or the MAP.
Rolando T. Dy is the Co-Vice Chair of the MAP AgriBusiness Committee and the Executive Director of the Center for Food and AgriBusiness of the University of Asia & the Pacific.