Income inequality weakens economic growth

Inequality in incomes and opportunities can weaken the power of economic growth as a key strategic vehicle for eliminating poverty in the country.
This was stressed by Socio-economic Planning Sec. Arsenio Balisacan saying that rising inequality can also undermine political and social stability, which is a necessary condition for sustainable development and prosperity.
Balisacan told members of the National Academy of Science and Technology (NAST) that poverty in the country remains high and has not changed much in recent years.
Based on the official poverty lines, the proportion of the population deemed poor decreased only slightly from 28.8 percent in 2006 to 27.9 percent in 2012.
Balisacan said the big challenge is ensuring that the growth process is inclusive.  “We mean that a lot more are able to participate in the growth process, but all benefit from the growth, particularly the poor.”
He pointed out that more needs to be done and over the past three years, the Aquino administration has been working to promote rapid, sustainable and inclusive growth.
“We have learned useful lessons along the way. Good governance has proven to be an effective platform upon which development strategies should be implemented.  Macroeconomic—fiscal, financial, external—and political stability fuels positive expectations that lead to growth.”
“Economic growth is necessary but not sufficient for poverty reduction. Growth strategies need to have geographic and sectoral dimension to ensure inclusivity.  And disasters, both natural and man-made, can negate the gains and even push back development,” said Balisacan.
NEDA is currently updating the Philippine Development Plan 2011-2016 to identify gaps and refine strategies in order to achieve development targets.
Balisacan noted that government provides enabling conditions for the private sector to invest in productive sectors of the economy.
“The government advances equity goal by broadening access to opportunities through connectivity and human development. The strategies and actions to achieve inclusive growth are doable within the plan period, especially in the second half of this administration.”
“We are not giving up on the twin goals of rapidly increasing employment opportunities to substantially reduce unemployment and poverty as close as possible to our Millennium Development Goal (MDG) commitment,” said Balisacan.