World Bank: Philippines likely to miss 2028 single-digit poverty target

MANILA, Philippines — The Philippines is likely to miss its goal of bringing down the poverty rate to single-digit level by 2028, according to the World Bank.

“As of this moment, we’re not projecting poverty in single-digits by 2028,” World Bank senior economist Liliana Sousa said in a briefing yesterday.

In its new report titled Building the Filipino Middle Class: Towards Resilient Futures and Poverty Eradication, the World Bank said that it expects the Philippines’ poverty rate to fall to 12.3 percent by 2028.

This is higher than the government’s poverty incidence goal of eight to nine percent by 2028 under the Midterm Update of the Philippine Development Plan for 2023 to 2028.

The World Bank’s estimate is based on a scenario of fast poverty reduction and healthy growth, as seen from 2012 to 2018.

Sousa said the projection already takes into account current shocks.

The World Bank report also provides long-term poverty rate estimates based on two scenarios.

Under a business-as-usual scenario, the World Bank expects the poverty rate to go down to six percent and to grow the secure middle class to 43 percent by 2040.

Meanwhile, a comprehensive reform scenario, which includes growth and job creation policies focused on equity and resilience, could lower the poverty rate to 2.9 percent and boost the middle class to 55 percent by 2040.

The comprehensive reform scenario would bring the country close to its AmBisyon Natin 2040 vision of a predominantly middle-class society where no one is poor.

The World Bank said the country has made progress in poverty reduction, with the poverty incidence rate declining to 15.5 percent in 2023 from 23.5 percent in 2015.

However, the progress is far from secure, with nearly 28 percent of Filipinos vulnerable or at risk of falling back into poverty.

It also said that the secure middle class, which is about a quarter of the population, has barely grown since 2018.

“With the right policy mix – one that boosts job creation and productivity while strengthening equity and resilience – the Philippines can all but eliminate poverty by 2040 and firmly put most of its people in the secure middle class. The goal is ambitious, but it is achievable with strong commitment to reforms,” World Bank division director for the Philippines Zafer Mustafao?lu said.

The report identified areas where reforms are needed.

With only one in three Filipino workers contributing to social security, leaving many unprotected in old age or job loss, the World Bank cited the need to create better jobs through reforms that encourage broader opportunities for formal employment for lower-skilled workers.

It said that reforms in this area should include ensuring access to early childhood care to build human capital and allow more women to enter and stay in the workforce.

The World Bank also cited the need to strengthen resilience.

In order to achieve this, the report calls for the updating of the poverty reduction program, Pantawid Pamilyang Pilipino Program, to index benefits to inflation and extend coverage to vulnerable households.

It also recommends better agricultural insurance and rebalanced agricultural spending in order to make food more affordable.

In addition, the World Bank cited the urgency of improving public services, including health and education, by strengthening local government capacity.

“The World Bank stands ready to support the government of the Philippines in this journey,” Mustafao?lu said.