In the Last Twelve Years, Philippine Income Inequality Has Declined Substantially

In the last twelve years, Income Inequality in the Philippines has declined substantially, primarily because income growth in the lowest classes have outpaced that of the upper classes. From 2006 to 2018, average per capita incomes for the poorest decile grew by a CAGR of 11.1% a year, while the incomes for the richest decile grew by a CAGR of only 2.81% during the same period. The average Filipino's income also grew by a decent CAGR of 5.1% a year.  As a result, the richest decile, which once towered over the poorest decile by almost 20 times income in 2006, now has a less intimidating ratio of less than 8 times income of the poorest class. For the average Filipino, that ratio has been cut in half, from 5.4 times the poorest decile in 2006 to just 2.8 times in 2018.

Related Links: Why Do Filipinos Love Duterte So Much? Because Income Growth was Fastest Among the Poorer Classes!

Source: Family Income and Expenditure Survey 2018

Why Do Filipinos Love Duterte So Much? Because Income Growth was Fastest Among the Poorer Classes!

Incomes grew across the board.

But incomes grew fastest among the lower classes. The lowest decile gained the most, while the highest income decile grew the least.

The ratio of the highest income decile to the lowest income decile has narrowed, reducing income inequality further.

Source: FIES Philippines, 2012, 2015, and 2018, Philippine Statistical Authority

It's Official: Economic Recovery in the Great Depression is Faster than the Great Recession's

The economic recovery of the Great Recession has been almost imperceptible to most Americans. On a per capita bais, real GDP per Capita grew by 11.55% in the past twelve years - or roughly a compounded annual average growth rate of only 0.91% per annum. This is far less than the so-called "Hindu Rate of Growth" threshold of 1.30% per annum.  This growth rate is so slow that it is almost imperceptible.

In 2019, something extraordinary happened. Those who survived the Great Depression in 1941 (twelve years after the onset of the Great Depression) will be substantially better of than the survivors of the Great Recession in 2019. Real GDP Per Capita for Great Recession survivors would have grown by another anemic 0.91% per annum in 2019. But for survivors of the Great Depression era, their incomes per capita would have grown by an astounding 15.95% in just one year. Moreover, that trend will only accelerate in the next two years. By 1943, Great Depression survivors will be almost 34.48%  richer than they were in 1941.

Can we expect the same for survivors of the Great Recession in the next two years? It's possible but not probable.

It's Official: The Current Economic Recovery is Now Much Slower Than That of the Great Depression

There's no doubt about it. The economic decline of the Great Depression was extremely severe. Nominal GDP per capita decline by almost 50% during the Great Depression versus a slightly more than 2% decline in Nominal GDP per capita during the Great Recession. Eleven years after the start of the Great Depression, Nominal GDP per capita was still almost 10% lower. In the Great Recession, it is 27.01% higher.

However, economic growth rates during the Great Depression were much more robust than that of the Great Recession, both on an absolute basis and on a per capita basis.

In truth, the economic recovery of the Great Recession has been almost imperceptible to most Americans. On a per capita bais, real GDP per Capita grew by 7.66% in the past eleven years - or roughly a compounded annual average growth rate of only 0.67% per annum. This is far less than the so-called "Hindu Rate of Growth" threshold of 1.30% per annum.  This growth rate is so slow that it is almost imperceptible.

In 2018, something extraordinary happened. Those who survived the Great Depression in 1940 (eleven years after the onset of the Great Depression) will be substantially better of than the survivors of the Great Recession in 2018. Real GDP Per Capita for Great Recession survivors would have grown by another anemic 0.67% per annum in 2018. But for survivors of the Great Depression era, their incomes per capita would have grown by an astounding 7.75% in just one year. Moreover, that trend will only accelerate in the next three years. By 1943, Great Depression survivors will be almost 56%  richer than they were in 1940.

Can we expect the same for survivors of the Great Recession in the next three years? It's possible but not probable.

Previous Post: The American Rate of Growth 

 Great Depression vs. Great Recession

The American Rate of Growth

The economic recovery of the Great Recession has been almost imperceptible to most Americans. On a per capita bais, real GDP per Capita grew by 7.11% in the past ten years - or roughly a compounded annual average growth rate of only 0.69% per annum. This is far less than the so-called "Hindu Rate of Growth" threshold of 1.30% per annum.  This growth rate is so slow that it is almost imperceptible.

 Sometime in 2018, if growth rates continue their current trend, something extraordinary will happen. Those who survived the Great Depression in 1940 (eleven years after the onset of the Great Depression) will be substantially better of than the survivors of the Great Recession in 2018. Real GDP Per Capita for Great Recession survivors would have grown by another anemic 0.69% per annum in 2018. But for survivors of the Great Depression era, their incomes per capita would have grown by an astounding 7.75% in just one year. Moreover, that trend will only accelerate in the next three years. By 1943, Great Depression survivors will be almost 56%  richer than they were in 1940.

Can we expect the same for survivors of the Great Recession in the next three years? It's possible but not probable.

Recovery in the Great Recession Has Been Amost Imperceptible - Let Me Tell You Why!

The economic recovery of the Great Recession has been almost imperceptible to most Americans. On a per capita bais, real GDP per Capita grew by 6.71% in the past ten years - or roughly a compounded annual average growth rate of only 0.72% per annum. This is far less than the so-called "Hindu Rate of Growth" threshold of 1.30% per annum.  This growth rate is so slow that it is almost imperceptible.

Sometime in 2018, if growth rates continue their current trend, something extraordinary will happen. Those who survived the Great Depression in 1940 (eleven years after the onset of the Great Depression) will be substantially better of than the survivors of the Great Recession in 2018. Real GDP Per Capita for Great Recession survivors would have grown by another anemic 0.72% per annum in 2018. But for survivors of the Great Depression era, their incomes per capita would have grown by an astounding 7.75% in just one year. Moreover, that trend will only accelerate in the next three years. By 1943, Great Depression survivors will be almost 56%  richer than they were in 1940. 

Can we expect the same for survivors of the Great Recession in the next three years? It's possible but not probable.

Great Depression vs. Great Recession GDP Growth Rates - Third Estimate of the First Quarter of 2017

Last Thursday, June 29, 2017, the Bureau of Economic Analysis released their third estimate of 2017's first quarter GDP growth rate: 1.40%. For the fourth quarter of 2016, GDP grew by 2.1%.

The economic recovery from the Great Recession has been downright sluggish, never taking off beyond the 3.00% growth rate that signals a robust economic recovery and always flirting with the 1.00% growth rate that signals a stalling economy.

On a nominal basis, the economy is 31% larger than what it was ten years ago. In real terms, it's just 13% larger.

On a per capita basis, real GDP grew by only 5.34% for the past ten years, for a compounded annual average growth rate of only 0.52% per annum - far less than the so-called "Hindu Rate of Growth" threshold of 1.30% per annum. This growth rate is so slow that it is almost imperceptible.

To top it all, the growth has not been evenly distributed. As of year-end 2015, Real Median Household Income stood at $56,516 or 1.58% below the Real Median Household Income of $57,423 in 2007 and 2.41% below that of 1999 ($57,909). Almost all the gains in the economy have been going to the upper echelons of US society.

Which Philippine Region Has the Highest Income Inequality?

We all know that Metro Manila, otherwise known as the National Capital Region (NCR), is the richest region in the Philippines.  Without question, it is the center of government, business, and finance in the entire country.

This is plainly evident in the 2015 Family Income and Expenditure Survey (FIES), where the NCR towers above the rest of the country in terms of Median Income Per Capita: Php 313,000 for NCR vs. Php 180,000 for the entire Philippines.

But which region has the highest income inequality?  One easy way to do that is by taking the ratio of the tenth decile (the top 10% in income) to the first decile (the bottom 10% in income).

From the 2015 FIES, we get this table...

	Median Income Per Capita (In Thousands of Pesos)
Region	Overall	Bottom 10%	Top 10%	Top/Bottom
Philippines	180	83	652	785.54%
NCR	313	164	940	573.17%
CAR	196	93	595	639.78%
Region I - Ilocos Region	173	99	553	558.59%
Region II - Cagayan Valley	168	98	557	568.37%
Region III - Central Luzon	223	103	614	596.12%
Region IVA - Calabarzon	234	106	711	670.75%
Region IVB - MIMAROPA	142	79	608	769.62%
Region V - Bicol Region	136	88	482	547.73%
Region VI - Western Visayas	149	87	523	601.15%
Region VII - Central Visayas	160	62	607	979.03%
Region VIII - Eastern Visayas	124	72	526	730.56%
Region IX - Zamboanga Peninsula	127	73	503	689.04%
Region X - Northern Mindanao	135	68	612	900.00%
Region XI - Davao Region	166	85	571	671.76%
Region XII - SOCSKSARGEN	123	56	495	883.93%
Region XIII - Caraga	134	74	544	735.14%
ARMM	115	82	255	310.98%

and this chart:

Based on this, we can see that the region with the highest income inequality is actually Region VII - Central Visayas, composed of the three provinces of Bohol, Cebu, and Siquijor.  In terms of overall income, this region is "middle of the road." Its median income per capita was only Php 160,000 in 2015, slightly lower than the Philippines median income per capita of Php 180,000. But, in Central Visayas, the top 10% earn almost 10 times the bottom, higher than the overall Philippine ratio of 7.85 times.

NCR was actually more egalitarian, wherein the richest 10% "only" earned 5.73 times the poorest 10%.  Surprisingly, the most egalitarian region is also the poorest: ARMM, where the median per capita income is only Php 115,000 (around US$ 2,300). There, the richest 10% earn "only" around 3.11 times the poorest 10%.