The Philippines recorded its lowest poverty rate on record last year, achieving its single-digit target ahead of schedule as sustained economic growth and tamer inflation boosted household incomes.

According to full-year data released by the Philippine Statistics Authority (PSA), the country’s poverty incidence fell to 9.7 percent in 2025 from 15.5 percent in 2023.

The 2025 figure translates to approximately 6.5 million Filipinos lifted out of poverty over the two-year period, bringing the total number of individuals living below the poverty line down to 11 million from 17.5 million.

The single-digit poverty rate marked the first time fewer than one in 10 Filipinos lived below the official poverty line—hitting the Philippine Development Plan’s (PDP) target ahead of its original 2028 schedule.

“Reaching this milestone ahead of schedule demonstrates that expanding economic opportunities, complemented by effective social protection, can make a meaningful difference in people’s lives,” Department of Economy, Planning, and Development (DEPDev) Secretary Arsenio M. Balisacan said in a statement on Friday, Aug. 21.

Economic growth, moderating price pressures, and resilient employment conditions drove the improvement, Balisacan said.

The country’s economy, as measured by the gross domestic product (GDP), expanded at an average real rate of 5.1 percent over 2024 and 2025, while inflation averaged 2.5 percent. Unemployment remained low at an average rate of four percent during the period.

Nominal household incomes also grew by about 22 percent across all income deciles between 2023 and 2025, outpacing the cumulative inflation rate of five percent over the same timeframe.

Balisacan said the gains indicated broad-based purchasing power growth across lower- and middle-income segments.

“As we enter the final years of the administration, our priority is to ensure that families who have moved out of poverty do not fall back into it,” Balisacan said.

Target social assistance measures, including cash transfers and emergency employment initiatives, also provided income support to vulnerable households, he added.

However, Balisacan also warned that the pace of poverty reduction could slow as global and domestic economic conditions become more challenging.

He noted that while current headwinds could temper momentum, early indicators do not suggest a reversal of recent gains.

He emphasized that policy focus must now shift toward preventing newly vulnerable households from slipping back below the poverty threshold through targeted investment, workforce upskilling, and shock-responsive social protection.

Meanwhile, Michael L. Ricafort, Rizal Commercial Banking Corp. (RCBC) chief economist, said the Philippines’ poverty rate falling to 9.7 percent reflects the buffering impact of targeted social safety nets against inflationary pressures.

Ricafort noted that the decline “could be a function of various assistance programs such as ayuda and even jobs for the poorest of the poor in recent years, even the ones in recent months to help the most vulnerable sectors to better cope with higher prices/inflation largely due to the war in Iran/Middle East since February 28, 2026."

He added that the drop is also supported by “various government financial assistance programs since the Covid-19 pandemic; targeted subsidies for hard-hit sectors such as transport, farmers, fisherfolk, etc. whenever there is a spike in global oil/petroleum prices earlier in 2026 and in 2022.”

Public healthcare initiatives have also provided another critical safety net for vulnerable households, as Ricafort noted that “the government’s various healthcare programs such as zero billing could have prevented some people from sliding into poverty at the very least, especially what would otherwise be large medical bills.”

However, he also warned that relying on extensive state relief carries clear fiscal trade-offs, leading to a “wider budget deficit of the national government and ballooning outstanding debt to finance the budget deficit.”

To achieve lasting poverty reduction beyond emergency transfers, structural reforms remain essential, Ricafort identified “education as the biggest equalizer, nutrition programs to increase completion rate for the poorest of the poor, making them eligible for employment locally and abroad, start earning in a sustainable manner and lift their families from poverty.”

He emphasized that the “creation of an environment more conducive to job/employment opportunities, investments, and business would also be more important to help lift more people from poverty.”

These developments align with broader economic milestones, which Ricafort described as “somewhat consistent with the country graduating to upper middle income status after nearly 40 years or since 1987, amid more employed Filipinos locally and abroad over the years.”

Looking ahead, he cited technology alongside education as a vital catalyst for rural growth, stating it will lift more people from poverty “especially in the countryside, by increasing productivity and incomes of the country’s agriculture and manufacturing sectors through the use of the best global technologies to boost production and reduce production costs, thereby increasing global competitiveness, incomes/jobs/livelihoods, increase food security/sufficiency, and lower prices/inflation.” (With a report from Danielle T. Bayani)