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As wide income disparity persists, Philippines to remain among poorest in SE Asia – EIU

In its latest report, the Economic Intelligence Unit said the Philippine economy would continue to be “marked by wide inequalities of income, and the disparity between the richest and poorest households would stay particularly acute.” File photo

MANILA, Philippines - The Philippines remains one of the poorest in Southeast Asia despite robust economic  growth in the past few years, the Economic Intelligence Unit (EIU) said.

In its latest report, the London-based think tank said the Philippine economy would continue to be “marked by wide inequalities of income, and the disparity between the richest and poorest households would stay particularly acute.”

The EIU is the research and analysis segment of the Economist Group, which also publishes the prestigious publication, The Economist.

By 2019, “the Philippines will remain one of Southeast Asia’s poorest economies with a lower level of GDP (gross domestic product) per head than the majority of the region’s other major economies, the EIU said.

The EIU noted that large numbers of Filipinos would continue to live in poverty despite recent economic gains achieved by the country. 

It said the rural poor would benefit only to the extent that the government directs spending towards improving the quality of essential services, such as education, healthcare and transport.

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Citing 2014 data, the research group described the Philippines as a small market, with a GDP per head estimated at only $2,843 at market exchange rates and $6,914 at purchasing power parity rates in 2014.

The EIU has forecast Philippines’ per capita income to increase to $4,549 by 2019  from the present $2,843.

After declining in US dollar terms in 2009, personal disposable income has recovered in recent years, and this trend is set to continue gradually in 2015 to 2019, the EIU said.

Among the more affluent middle class, a number of trends may influence domestic demand and cause it to strengthen, it added.

Strong inflows of remittances from Filipinos working abroad, relatively low interest rates and stronger job growth have buoyed consumer expenditure.

Apart from this, the EIU noted that the Philippines banks have been moving away from their traditional areas of activity towards an increasing emphasis on retail financial products, such as loans for housing and cars, and debit and credit cards.

Growth in credit-card use, in particular, has accelerated strongly in recent years, the EIU said.

Government transfers, notably in the form of the conditional cash-transfers (CCT) program, which requires parents to send their children to school and have regular health checks in exchange for cash handouts, have facilitated growth in the private consumption of lower-income brackets in recent years.

Some 52 percent of household spending went towards basic necessities such as food in 2013.

“Although poverty will remain a problem, continuing healthy rates of economic expansion in 2015-2019 will also benefit the poorer segments of the population,” the think tank added.

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