The good news, according to the World Bank, is that while the global economic growth slid down in 2019, and will continue to deteriorate in 2020, and while East Asia and the Pacific will slow down from to 5.7% growth in 2020, and 5.6% in 2021, our growth rate will only taper down slightly and then reach a plateau but exceed the region and the world.
The bad news, according to the same source, is that the Philippine economic growth, which was on the way to the top in the region, weakened due to a number of external pressures as well as many difficult domestic challenges. 2018’s growth of 6.2% slid down to 5.8% in 2019 due to, among others, the delay in the passage of the 2019 national appropriations act, which slowed down government spending, and this impacted unemployment rates and thus, lower consumer spending. The good news again, is that in 2020, the economic growth will grow to 6.1% then to 6.2% in 2021. External factors impinging on our economy includes trade and security tensions between US and China, with Japan caught in between. If you’re not an economist, as I’m not, you won't readily see the reasons why.
There are also too many internal challenges that puts obstacles to maintaining what was expected as unstoppable growth momentum that our country already achieved in the last semester of 2017 and the whole of 2018. These include too high population growth rate, the highest in the region; too high poverty rate and unemployment rate, which the Duterte administration somehow had both successfully arrested; too wide disparity of wealth distribution, and income across sectors and economic strata; too many natural calamities and environmental disasters; and crime, corruption, and other factors, including terrorism, insurgency, and the security and peace issues in Mindanao.
But all these external pressures and internal difficulties notwithstanding, we are happy to note that the fundamentals of the country's macro-economic growth plans and strategies are seen to be sound by the World Bank. Our fiscal and monetary policies are supportive of growth. Our government economic team, in tandem with private business leaders however must be able to steer our business and industry sectors given the weak global economic environment. They must also address the internal challenges more adroitly, especially the slow recovery of the public investments. The continuing pouring in of dollar remittances from our millions of OFWs are neutralizing whatever negative impact come from the negative factors, both external and domestic.
Another good news is that the Duterte administration will continue to reduce the poverty rate from 26.9% in 2015 to 20.8% in 2019. In 2020, the rate is expected to go down to 19.7% and in 2021 to 18.7%. Before the president leaves Malacañan, we hope this will be reduced to only 15%. It appears that both the GMA and the PNoy administrations failed in their respective poverty reduction programs. This president is succeeding. The World Bank measures poverty based on an imaginary line of US$3.20 of disposable income per day. That is roughly P166.4 a day. In other words, any Filipino who does not earn that amount each day is considered poor. At 26.9%, there were 26.9 million poor Filipinos during PNoy's presidency. There are only 20.8 million poor today. In 2020, only 19.7 million and in 2021, only 18.7 million. That is still too many to me though, but we are moving forward.
This government has to be commended for the many bold strokes of game-changing reforms it has adopted to keep our country growing, like the Ease in Doing Business Law, the Rice Tariffication Act, the foundational ID systems, and many other transformational innovations. The World Bank recommends that for our country to continue growing and do so at even faster rates, we need to put in place a number of changes to create more competitive markets. We need to address the restrictive and unclear restrictions in the infra and professional services sectors, eliminate trade barriers and protectionism, cut away restrictions for the entry of foreign investments, and streamline burdensome government procedures in licensing and government controls over the business sectors.
I have misgivings about amending the constitution in order to open up our domestic markets to the entry of competition. But this is a usual paradox on embracing globalization while closing our doors to the entry of foreign investments. It’s like saying that we want the world to open up for the entry of our goods and services, but we don't want them to enter our domains. The Philippine economic team must find a way to untie this seemingly intractable Gordian knot.