Growing poverty in a growing economy

October 11, 2018

I had dinner recently with a top foreign diplomat newly assigned to the Philippines and he seemed puzzled why many Filipinos remain poor in a country considered one of Asia’s fastest growing economies for several years now.

As I was groping for sensible answers and insights into our predicament as a nation, I also became momentarily puzzled myself. But after a while, I came to realize again that the underlying reason for our predicament has not changed: While the Philippines is accomplishing a lot to be among Asia’s fastest growing economies, other countries are simply doing better.

A case in point is the soaring inflation rate as prices of  basic items spiral out of control amid the weakening of the peso and spike in fuel costs globally. Last August, our inflation figure of 6.4% was highest in Southeast Asia. Our neighbors such as Thailand had theirs only at 1.5%, Malaysia at 0.9%, Indonesia 3.2%, Vietnam 4.5%, and Singapore at 0.6%.

Looking at comparative data on inflation in our region begs the logical question: What economic policies are others doing right that our country’s economic managers are doing so wrong? Couldn’t our government also grant subsidies on certain items to stem inflation just like what other countries are doing? How come it’s so difficult to suspend fuel excise taxes when the money accumulated on such are not even spent anyway?

Our inflation rate, which reached 6.7% for September, has become so alarming to many Filipinos. The latest Pulse Asia survey showed that Filipinos’ level of concern over high prices at 63 % has increased by +12 percentage points, compared to the June survey which pegged at 51% the level of public concern. Actually, the number of Filipinos worried over inflation started rising last March, at 45%, higher than the 43% on December 2017.

As a result of soaring inflation, the number of poor Filipino families has increased. Results of the latest SWS survey released the other day showed that self-rated poverty jumped to 52 percent, equivalent to some 12.2 million families, from 48 percent, or 11.1 million families in June. The increase was the highest level of self-rated poverty incidence in four years.

SWS said that of the 52 percent who considered themselves poor in September, 85 were “newly poor,” or those who rated themselves not poor one to four years ago. SWS also found that 36 percent, or 8.5 million families, considered themselves food-poor, up by 700,000 families from 34 percent last June.

With the Pulse Asia survey showing that  63% of Filipinos in all geographic areas and socio-economic classes expressed a sense of urgency on inflation, there’s no doubt that the Duterte administration must find – sooner rather than later – effective solutions to bring inflation down to manageable levels, especially for the poor who are hardest hit by hard times.

For the millions of impoverished Filipinos who can barely afford to eat three meals a day, controlling inflation is indeed a gut issue, more than anything else under the sun. Our economic managers must keep in mind the adage that “a hungry man is an angry man.”

It’s a good thing though that instead of downplaying the pressing problem, Malacañang has finally acknowledged it. "Right now the foremost priority of the administration is fighting inflation so everything is sidelined," Presidential Spokesperson Harry Roque said. "I would say that even the administration acknowledges na mas importanteng harapin yung problema na malapit sa sikmura ng taong bayan bagamat hindi po natin inaabandona ang pederalismo.”

What Roque said was a far cry from his earlier statement weeks ago as he tried to downplay the impact of high prices: “Take it easy, it’s still normal. Inflation is higher than usual but it’s nothing to worry about.”

Indeed, acknowledging the problem is the crucial first step towards solving it. But it’s really a matter of transforming words into actions – swiftly and decisively.