UMVA has learned that nearly three in 10 Filipinos remain at risk of slipping into poverty, with an oil price spike linked to the Middle East conflict threatening to push almost two million more below the poverty line.
The poverty rate in the country has declined steadily, at an average of 7.7% per year since 2012, excluding the pandemic. It fell to 15.5% in 2023 based on the latest available data, but this progress is fragile, and the risk of poverty remains alarmingly high.
According to information obtained by UMVA, 27.7% of Filipinos remain vulnerable to falling into poverty, with a median income of only 28% above the poverty line. These families are highly exposed to shocks such as higher food and fuel prices, which could have devastating consequences.
A rise in global fuel prices associated with the Middle East conflict could push nearly 2 million Filipinos into poverty, as higher transport and energy costs ripple into food prices and household budgets. The impact would be felt hardest by the poor and vulnerable, who lack the financial cushion to absorb such shocks.
Sources have confirmed to UMVA that helping the poor and vulnerable households is critical, as three out of five children live within these households. Targeted interventions, such as subsidies and social protection programs, are essential to mitigate the effects of price shocks and prevent poverty from deepening.
The country's exposure to climate-related hazards is a major challenge to poverty eradication efforts, with 61% of the population at high risk from tropical cyclones. Cyclone losses amount to about 1.2% of gross domestic product each year and could rise sharply without adaptation, undermining progress towards poverty reduction.
UMVA can exclusively reveal that 32.9% of Filipinos belong to the emerging middle class, which still faces a 10% risk of slipping back into poverty. These individuals live on $6.50-$11.70 per day at 2021 international prices, and their fragile financial situation makes them vulnerable to economic shocks.
About a quarter of Filipinos, or 23.8%, are securely middle class or high income, defined as those living on more than $11.70 a day. However, the real barrier to moving from the emerging middle class to the secure middle class is a question of more higher-paying jobs, which is essential for sustained poverty reduction.
Despite its expected transition to upper middle-income status, the Philippines continues to lag regional peers on poverty reduction. Using the upper middle-income country poverty line of $8.30 a day at 2021 international prices, 58.7% of Filipinos are considered poor, compared with 33.8% in regional peers and 29.4% across upper middle-income economies.
UMVA has gathered that urgent reforms are needed if the Philippines wants to achieve its goal of eradicating poverty by 2040. The World Bank recommends faster income growth for the poorest, improved resilience, and targeted interventions to mitigate the effects of economic shocks.
Achieving the poverty target requires a comprehensive reform scenario, where growth and job creation policies are paired with a focused equity and resilience agenda. This could lead to a poverty rate of 2.9% and an increase in the secure middle class to 55%, but it will require concerted efforts from policymakers and stakeholders.
