PIDS: Despite PH economic gains, millions still vulnerable to poverty
Millions of Filipino families remain at risk of poverty even as the Philippines moves closer to upper-middle-income country (UMIC) status, showing that national economic gains are not trickling down to the poorer segments of society.
The latest study by the state-owned think tank Philippine Institute for Development Studies (PIDS) showed that, relative to the World Bank’s UMIC poverty threshold of $8.30 a day, 58.7 percent of the Philippine population remains vulnerable to poverty.
Poverty vulnerability rate measures the proportion of households or individuals with a high probability of falling into or remaining in poverty due to unforeseen economic, health or climate-related shocks. It is generally double or triple the official poverty rate, identifying those near-poor households at risk.
The view comes even as the country’s poverty incidence, or the proportion of families or individuals whose per capita income is not sufficient to meet their basic food and non-food needs based on the government-established poverty threshold, declined to 15.5 percent in 2023 from 24.9 percent a decade earlier, while extreme poverty dropped to 5.3 percent from 24.3 percent.
According to PIDS, a major factor driving household vulnerability was the pandemic, which disrupted the trajectory of middle-class development and highlighted the fragility of previous economic gains.
“While the country has made significant strides in reducing extreme poverty and in expanding the middle-income class over the past three decades, the COVID-19 pandemic highlighted the fragility of these gains and the vulnerability of many households to shocks,” PIDS noted.
Broader social protection
“The vision of a predominantly middle-class Philippines by 2040 remains achievable but requires sustained commitment to policies that promote inclusive growth, reduce vulnerability and build resilience,” it added.
PIDS also cited a persistent urban-rural divide as a key driver of vulnerability, with rural areas continuing to lag in economic opportunities, infrastructure and access to essential services.
“This concentration, while beneficial for regional economic growth, may exacerbate inequality and limit long-term growth potential by underutilizing human and natural resources in other regions,” PIDS pointed out.
To address this, PIDS said the country should also focus on preventing future poverty, not just reducing current poverty, by transitioning toward universal social protection mechanisms.
”This implies that a social protection system focused narrowly on the poorest is no longer sufficient in a context where poverty is increasingly dynamic and shock-driven. As the Philippines approaches upper-middle income status, social protection must therefore evolve from a primarily poverty-alleviation instrument into a broader system for preventing downward mobility and strengthening household resilience,” PIDS said.
Poverty incidence
Malacañang reported earlier this week that the number of people living in poverty decreased by 2.4 million from 2021 to 2023, bringing the total to 17.5 million Filipinos.
Despite the country’s economic gains, the Philippines remains classified as a lower-middle-income economy, narrowly missing the World Bank’s gross national income (GNI) per capita threshold by $26. The country recorded a GNI per capita of $4,470, just below the $4,496 cutoff for upper-middle-income status.
Finance Secretary Frederick Go earlier expressed optimism that the Philippines can still reach UMIC status this year, amid expectations of an economic rebound and steady growth.
This contrasts with the more pessimistic expectations of the private sector.
An Inquirer poll of 14 economists last week yielded a median growth estimate of 4.2 percent for the fourth quarter of 2025, indicating that average growth last year may have settled at 4.8 percent.
If borne out, the figure would fall well short of the government’s 5.5- to 6.5-percent growth target for 2025, extending a streak of missed annual goals that began in 2023.
At the same time, the World Bank requires a country’s GNI per capita to exceed the benchmark for three consecutive years before formal reclassification.
This means the Philippines could officially attain UMIC status only by 2028, even if it surpasses the cutoff this year.
The year 2026 is seen as critical for the country, coming after its economic confidence was shaken by the fallout from a flood-control corruption scandal.
The Marcos administration has already downgraded growth targets for 2026 to 2028 in anticipation of another economic shortfall in 2025.
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