If you recall his first State of the Nation Address in July 2022, President Ferdinand Marcos Jr. made a bold promise: by 2028, the end of his term, poverty would fall to a single digit, 9% to be exact.

It was hard to believe then. Poverty stood at 18.1% in 2021. Cutting that in half in six years would have required the fastest sustained poverty reduction in our history, at a time when the economy was still crawling out of the pandemic.

Now a new World Bank report all but confirms the target is unfeasible. In its latest poverty assessment for the Philippines, titled “Building the Filipino Middle Class,” the World Bank projects that even if the economy converts growth into poverty reduction as efficiently as it did before COVID-19 (already a generous assumption) poverty will fall only to 12.3% by 2028. The Bank’s own simulations show that under current policies, poverty will still be at 11.1% by 2030.

In other words, the single-digit dream is dead. The President will leave office with the promise unmet.

But the report’s deeper message is more sobering than a missed target.

Yes, poverty fell to 15.5% in 2023, and inequality is at its lowest in four decades. But the gains are fragile. Nearly 28% of Filipinos are vulnerable to sliding into poverty, with incomes hovering just 28% above the poverty line. Of those who were poor in 2023, about half were not poor in 2021. These are families churn in and out with every typhoon, illness, or price spike.

Meanwhile, the secure middle class has been stuck at around a quarter of the population since 2018. By the standard of upper-middle-income countries, or the club we keep saying we’re about to join, nearly 6 in 10 Filipinos are still poor. No wonder most Filipinos rate themselves poor in surveys, whatever the official statistics say. (READ: Are you part of the Philippine middle class?)

Glacial progress

Worse, while waiting for newer poverty data, we have done remarkably little to speed things up.

Faster poverty reduction requires consistent structural transformation: workers moving into more productive, better-paying jobs. Some of this happened: nearly all of the poverty decline since 2012 came from wage jobs outside agriculture.

But these were mostly low-skill jobs in construction and commerce. Real wages of college graduates have been flat for a decade, and underemployment remains stubbornly high. Investments, especially in industry and manufacturing, but even in services, are too weak to create the better jobs a middle class is built on. Exports and manufacturing, the World Bank notes, have stagnated. (READ: [Vantage Point] Does JG Summit’s petrochem exit signal the end of PH industrialization?)

At the same time, social protection, our supposed safety net, is weak, fragmented, and heavily politicized. Coverage of 4Ps (Pantawid Pamilyang Pilipino Program), our best-targeted program, shrank from 4.4 million to 3.1 million families, while benefits were eaten by inflation.

In its place mushroomed poorly targeted ayuda that’s handed out, conveniently, with politicians’ faces on the tarpaulins. Arguably the World Bank’s most damning finding is that vulnerable households are net payers into the fiscal system, in that they give more in taxes than they get back in benefits.

Local governments, which now deliver many basic services after the 2018 Mandanas ruling of the Supreme Court, are incapacitated. The tax allocation formula rewards population and land area, so the richest cities get the biggest budgets per person, even if 90% of the poor and vulnerable live outside them. Many poor municipalities can’t even spend what little they receive.

On top of all these are the self-inflicted wounds of late: the flood control scandal froze infrastructure spending and destroyed construction jobs, just as the oil price shock from the Middle East conflict pushed up food and transport costs. The World Bank warns the latter alone could throw nearly 2 million Filipinos back into poverty.

The pivotal six years

With business as usual, the World Bank projects that poverty will still be at 6% by 2040, and the secure middle class will cover just 43% of the population.

But with a full package of reforms (including faster growth and better jobs, stronger social protection and resilience) poverty falls to 2.9%, near eradication. And a majority of Filipinos, about 55%, become securely middle class.

The fork between those two paths will be decided largely in the next administration, from 2028 to 2034. Whoever wins in 2028 will set not just the growth trajectory but the pace of poverty reduction and the expansion of the middle class for a generation.

The reforms are well-known: fix the business climate so we attract waves of investments that will create more and better jobs, expand 4Ps and make it inflation-proof, fix labor rules so firms hire regular workers, and redirect resources to poor localities rather than already developed cities.

The bigger binding constraint for the country is not knowledge on how to fix things, but political will needed to implement reforms—and a public that votes for it.

The dream of single-digit poverty by 2028 is gone, and the zero-poverty target of Ambisyon Natin 2040 is feasible only under the ideal circumstances. Things could get a lot worse, believe it or not, so we need to get it right in 2028. – Rappler.com

Jan Carlo “JC” Punongbayan, PhD is an associate professor at the University of the Philippines School of Economics (UPSE). His professional experience includes the Securities and Exchange Commission, the World Bank Office in Manila, the Far Eastern University Public Policy Center, and the National Economic and Development Authority. JC writes a weekly economics column for Rappler.com. He is also co-founder of UsapangEcon.com and co-host of Usapang Econ Podcast.

His first book, False Nostalgia: The Marcos “Golden Age” Myths and How to Debunk Them, was published by Ateneo de Manila University Press in February 2023. His second book, Twin Plagues: How Duterte and Covid-19 Wrecked the Philippine Economy, will be published by Penguin Random House SEA in June 2026.  Follow him on Instagram (@jcpunongbayan).

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