The World Bank said Tuesday that the poverty incidence rate in the Philippines is seen to increase for 2020 due to the economic impact brought by the coronavirus disease 2019 (COVDI-19) crisis.
“We can expect an increase in poverty rate,” World Bank senior economist in the Philippines Rong Qian told reporters in a virtual press conference.
“We did a simulation, only assuming two months of loss of income by the poor and vulnerable population, the poverty rate can increase by 3.3 percentage points in 2020,” Qian said.
The World Bank economist also noted that the assumption of 3.3 percentage points increase in poverty incidence also assumed there are no social protection measures.
“We know that the government has provided the SAP (social amelioration program) and wage subsidies,” Qian said.
The SAP, however, only covered the loss of income during the lockdown periods, she added.
“Because the economy is expected to contract, we can expect the poverty rate to increase in 2020,” Qian said.
The Philippine Statistics Authority reported in December 2019 that the poverty rate in the Philippines fell to 16.6% from the previous record of 23.3% in 2015.
The World Bank also sees that the Philippine economy will contract by 1.9% in 2020 due to COVID-19 impact.
“The trajectory that we are seeing is a deeper recession in the second quarter because the ECQ (enhanced community quarantine) covered most of the second quarter,” Qian said.
For the third quarter, the economist said the contraction could be somewhere between the gross domestic product (GDP) recorded in the first and second quarters before reverting to a “muted growth in the fourth quarter.”
According to the World Bank, the Philippine economy will revert to growth at an estimated 6.2% next year.
The poverty incidence would decline as the economy recovers, Qian said.
In April, the World Bank approved a $500 million (P25.2 billion) loan of the Philippines, which will be used to fight the COVID-19 pandemic.
The World Bank is an international financial institution that provides loans and grants to the governments of poorer countries to pursue capital projects. It comprises two institutions: the International Bank for Reconstruction and Development and the International Development Association.