ADB warns Philippines against getting stuck in “poverty trap”

MANILA, Philippines – The Asian Development Bank (ADB), in a new study on poverty, warned that unless the Philippine economy is able to shift to higher growth trajectory, the country might be “stuck in a poverty trap.”

The ADB study, which projected poverty incidence of various Asian countries by 2020, noted that poverty reduction in the Philippines could be limited for the next decade due to the current financial crisis, the report said.

Exports, the report the said, may be greatly affected as the Philippines’ major export partners are in recession namely countries in the European Union, Japan and the United States.

Failure to generate jobs

According to the ADB study, the main reason why poverty reduction in the Philippines has been slow compared to other Asian countries is the failure of the economy to grow and “generate quality employment in sectors with large numbers of the poor.”

“Because of the boom and bust cycles of the Philippine economy in the last three decades and only moderate economic growth performance in recent years, employment opportunities have failed to keep up with this growth in the labor force,” the report said.

The study analyzed that this is the reason why the poor are constrained in terms of opportunities to escape deprivation. This also “increased the probability of the non-poor to become poor,” according to the report.

Failure to sustain high levels of economic growth explained the unavailability of jobs in the country. “Without job opportunities, people will not be able to earn incomes and are vulnerable to poverty,” the report stated.

The report noted that the working age population in the Philippines has been growing by 2.6% annually from 1997 to 2008.

Apart from population increase, the growth in the Philippine labor force is also attributed to the steady increase in the participation of women in the workforce. In 2008, women already comprised almost 65% of the labor force, a significant increase from the 49% women participants in the 1970 labor force.

Poverty projections among Asian countries

Among Asian countries analyzed by the ADB, Nepal and the Fiji Islands were projected to have the two highest poverty incidences by 2020. Nepal’s poverty incidence could range from 44.7% to 48.6% while Fiji Islands’ could be from 23.9% to 30.1%.

The ADB projected that Viet Nam, Thailand, Maldives and Malaysia would have 0% poverty incidence in their countries.

The projection is based on the ADB Key Indicators 2008 using the purchasing power parity poverty lines in 2005 which is $1.25 per day. –Maria Althea Teves, abs-cbnNEWS.com/Newsbreak

View the full report here