Poverty in the country is projected to keep falling in the coming years as the economy creates more and better-paying jobs, though the decline is expected to be slower than pre-pandemic gains, the Washington-based World Bank (WB) said.

The WB’s latest Philippines Economic Update (PEU) for December 2025, titled Growth Corridors: Pathways Out of Poverty,” projects that the national poverty rate will fall to around 12.5 percent by 2027. The WB, however, emphasized that sustaining this decline will depend on stronger job creation and real wage growth.

“More robust safety nets will also be needed along with targeted measures to mitigate climate- and food-price shocks, which have increasingly undermined household welfare in recent years,” the WB added.

The WB highlighted that increasing wages, driven by workers moving from agriculture to the services sector, have played a key role in reducing poverty over the long term. It noted that by 2023, the national poverty rate had fallen to 15.5 percent from 18.1 percent in 2021, returning to levels seen before the pandemic.

“The labor market continued to strengthen in 2025, supporting household incomes despite the slowdown in growth,” the WB said.

The latest Philippine Statistics Authority (PSA) data showed that gross domestic product (GDP) growth slowed sharply to four percent in the third quarter, marking the slowest expansion in 4.5 years and the weakest since the 3.8-percent economic contraction recorded in the first quarter of 2021 during Covid-19 lockdowns.

“The employment-to-population for working-age rate has continued to rise, averaging 61.5 percent during the first three quarters of 2025, an increase of 290,000 workers from the same period in 2024 (60.8 percent). Labor force participation also grew (64.1 percent compared to 63.3 percent in 2024). This reflects the economy’s capacity to continue generating job-rich growth,” the WB noted.

However, the PSA’s labor force survey (LFS) for October reported that the country’s unemployment rate rose to a three-month high of five percent, leaving around 2.54 million Filipinos jobless. Meanwhile, the labor force participation rate (LFPR) increased to 63.6 percent, or about 51.16 million people, up from 63.3 percent a year earlier, as more Filipinos sought jobs amid the Christmas holiday season.

The WB warned that about 4.8 million Filipinos still cannot afford a basic food basket, while 27.7 percent of the population remains just above the national poverty line. The bank added that this group is highly vulnerable to shocks that could quickly undo recent poverty reduction gains, with climate-related disruptions and rising food prices identified as the primary risks.

The WB report nonetheless noted that over the past decade, the Philippines has achieved notable poverty reduction, driven by faster growth in low- and middle-income regions other than National Capital Region (NCR), and improved rural connectivity to cities, which enhanced access to jobs and markets. “The challenge now is to build on this momentum by deepening the integrated development of high-potential urban corridors and strengthening the foundations of local governments,” the WB said.

Additionally, “evidence shows that 4Ps [Pantawid Pamilyang Pilipino Program] has helped more than one million households escape extreme poverty and has improved children’s health, education, and human capital outcomes,” the WB added.

The WB stressed that “without 4Ps transfers, the 2023 poverty rate would have been 2.2-percentage points (ppts) higher.”

It also noted that higher earnings have played a crucial role in reducing poverty.

(Ricardo M. Austria)