Philippines urged to support the vulnerable to cushion economic impact of crisis

29 Sep 20

Social assistance to poor and vulnerable families will help the economy weather the Covid-19 storm, the Philippines has been told.

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A family selling candles in the Philippines

A family selling candles in the Philippines

 

The pandemic has triggered job losses and a decline in remittances sent home by Filipino workers overseas, and the economy is expected to contract by 6.9% in 2020, the World Bank said in a report.

The Philippines has experienced one of the worst outbreaks in the region, where most other countries have contained the virus well, the report said, and it has gone on a cycle of repeated strict lockdowns and reopenings.

To help the recovery, alongside effective public health management to stem the health crisis, the government should ensure that those living in poverty are supported throughout the pandemic and into the period in which the economy begins to expand again, the report said..

“In the short term, every peso put directly in the hands of poor and vulnerable families through social assistance translates into demand for basic goods and services in local communities, which in turn supports micro and small enterprises and the government’s recovery efforts,” said Ndiamé Diop, World Bank country director for the Philippines.

Covid-19 is expected to reverse the sustained trend of poverty reduction in the East Asia and Pacific region, the World Bank warned.

Before the pandemic, 33 million people were projected to escape poverty this year, but now 33-38 million more people are expected to fall into poverty instead.

In the Philippines, the past five years have seen economic growth of an average of 6.6% each year, because of “prudent macro-fiscal management, significant investments in infrastructure and human capital and favourable external conditions”, the World Bank said.

The resulting rise in household incomes reduced the national poverty rate from 23.5% in 2015 to 16.7% in 2018, but Covid-19 risks reversing this progress.

World Bank senior economist Rong Qian said the government should return to its pre-crisis level of public investment once it is able to.

“In the medium term, sustaining the public infrastructure spending agenda will support economic recovery while addressing long-standing infrastructure gaps in the country,” she said.

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