Simulating COVID-19 Impacts on Poverty and the Middle-Income Class in the Philippines: Implications for Inclusive Growth

This study uses simulation techniques to estimate the potential effects of the COVID-19 pandemic on poverty rates and middle-class transitions in the Philippines, addressing data gaps during the pandemic’s early stages. Using data from the 2018 Family Income and Expenditure Survey, the authors modeled various income reduction scenarios to project changes in poverty levels and socioeconomic class distribution. The findings indicate that a 5-percent income contraction could raise poverty rates by 2.4 percentage points, pushing an estimated 2.6 million Filipinos into poverty. However, the Social Amelioration Program could mitigate this increase, limiting it to 1.3 million additional poor. The study also explores the implications for the country’s AmBisyon Natin 2040 goals and highlights policy priorities for an inclusive recovery. While based on pre-pandemic data and hypothetical scenarios, this study offers valuable insights into the pandemic’s possible impacts and underscores the importance of targeted policy responses.