Habito: Expect rise in poverty incidence

High prices, especially of the Filipino staple rice, likely pushed more families into poverty last year even as economic growth is expected to remain robust in the near term, according to former National Economic and Development Authority (Neda) chief Cielito F. Habito.

“Rice prices alone, when they go up, can push a significant number of people below the poverty line. It happened in 2013 [and] it is not unlikely that the next FIES will show an uptick in poverty incidence,” Habito said Thursday during the Ateneo Eagle Watch forum titled “Dutertenomics: Are We in Track? A Mid-term Economic Assessment.”

Habito, a professor of economic development and senior fellow at the Ateneo de Manila University, was referring to the Philippine Statistics Authority’s (PSA) FIES or the Family Income and Expenditure Survey. The 2018 edition would be out this coming March, national statistician Lisa Grace S. Bersales said in a separate text message.

The FIES, held every three years, showed that poverty incidence among families posted a steady decline from 26.6 percent in 2006, 26.3 percent in 2009, 25.2 percent in 2012 and 21.6 percent in 2015.

However, Habito noted that in 2013 during the Benigno Aquino III administration when rice prices spiked, a separate annual poverty indicator used by the Neda showed a consequent increase in the number of poor families.

Habito told reporters that the poverty incidence in 2013 increased by about 1 percentage point, and the uptick in 2018 could be higher as rice prices rose faster last year.

“Compared to what happened in 2013 as I recall, the most drastic rice price increases we’ve seen is what happened last August in the Philippines, and that is because of the mishandling or mismanagement of the NFA [National Food Authority] of rice importation,” Habito said.

As such, “a lot of people are expecting that the poverty incidence in 2018 will be higher than [2015’s] 21.6 percent,” Habito said.

He noted, “food takes a much higher share of poor families’ budgets.”

As a result of the shortage in domestic supply, rice prices rose in the third quarter of last year, pushing headline inflation or the rate of increase in prices of basic commodities to an average of 5.2 percent in 2018, a 10-year high.

The inflation rate in areas outside the National Capital Region was also higher last year, he added.

“It was an antipoor, antirural area inflation,” he said, noting 70 percent of poor Filipinos lived in rural areas.

For 2019, Habito expects the economic outlook to be “more of the same—no spectacular changes upward nor downward.”

Habito projected GDP growth at 6-6.5 percent this year, to be boosted by election-related spending. The government targets 7-8 percent growth in 2019. Inflation, meanwhile, was expected by Habito to settle between 3 and 4 percent.