Disasters to swell ranks of the poor

Massive destruction of personal property and loss in value of assets in flooded areas point to many people being poorer as a result and would tend to consume and invest less.

Major disasters that struck the country this year alone have resulted in the sudden increase in poverty level among Filipinos and have cut the country’s economic growth by 1 percent.

The twin typhoons Ondoy and Pepeng brought up the poverty level to 34 percent from 32 percent, according to former budget secretary Benjamin Diokno during a presentation at the GFK Group’s 4th Annual Conference held in Makati City recently.

He said the typhoons alone could significantly increase poverty since those severely affected by the floods were in the metropolitan area and other parts of Luzon that make up 66 percent of the gross domestic product (GDP).

With the rice and oil crisis that beset the Philippines in early 2008, and the economic crisis that rendered many Filipinos jobless this year, the twin typhoons will only make the poverty outlook dimmer than it already is, Diokno said.

In his presentation entitled “The World Economic Crisis: Its impact on the Philippine Economy,” the economic professor from the University of the Philippines stressed that in the medium term, the “Philippine economy will grow below its previous peak, but in line with a slow, new ‘normal’ growth for the world economy.”

Diokno said that the next Family Income and Expenditure Survey (FIES) of the National Statistics Office (NSO) could indicate the effect on poverty incidence of the storms. The FIES is currently being conducted and will be released late 2010.

In the previous poverty report of the National Statistical Coordination Board (NSCB), which used data from 2006 since the FIES is only conducted every three years, around 33 out of 100 Filipinos were considered poor in 2006. This translated to 4.7 million families and around 27.6 million Filipinos living below the poverty line.

“Poverty incidence will get worse before it gets better.”

Diokno, however, explained that while the country’s economic recovery will eventually happen, “it definitely would not be in the immediate terms.” He cited the world will take at least five years to get back on the precrisis growth level of 2007.

For the Philippines, without factoring in the effects of the two typhoons, growth in 2009 will be at 1.4 percent, 2010, 2.4 percent; 2011, 3.2 percent, and 2012, 3.4 percent, Diokno said. But with the effect of the typhoons, growth will be at around 1 percent this year and 2.6 percent in 2010.

Slower economic growth is indicated by the decline in agriculture, fishery and forestry as a result of the two recent destructive typhoons, and achieving its average growth rate of 4 percent in 2003 to 2007 may not be attained any time soon.