The United Nations Development Programme (UNDP) has warned that the prolonged effects of the global energy crisis could weaken the Philippines’ human development gains, with rising costs continuing to squeeze household incomes and threaten progress in health and education.
In a policy brief, the UN agency said the country could experience a measurable setback in human development equivalent to 0.01 to 0.05 years if current pressures persist, placing the Philippines on what it described as a “crisis path” for inclusive growth.
“The setback would run through all three dimensions of the Human Development Index (HDI), which combines a country’s income, health and education outcomes into a single measure,” the UNDP said.
The report said the impact is first felt through income losses as inflation and slower growth reduce real purchasing power, followed by gradual effects on health and education as families adjust spending.
“Income first, as inflation and slower growth erode real household incomes, and health and education more gradually, as households under pressure cut back on food, postpone medical care and, if the strain persists, withdraw children from school,” the UNDP added.
The agency noted that the Philippines posted an HDI score of 0.720 in 2023, slightly higher than the previous year, but slipped in global ranking and remained below the regional average for East Asia and the Pacific.
It warned that the longer the disruption continues, the deeper the long-term development consequences could become, as energy costs, food prices, and remittance pressures interact and place added strain on vulnerable households.
“The longer the disruption persists, the greater the development challenge, since the three transmission channels, namely energy, agricultural inputs and remittances, reinforce one another and converge on an economy whose aggregate gains rest on thin household margins,” the UNDP said.
The report also highlighted the regressive nature of the crisis, noting that nearly three in 10 Filipinos living just above the poverty line are at risk of slipping back into poverty due to even small price increases.
“For these households, even a moderate rise in fuel or food prices can trigger a reversal of progress, pushing them back into poverty, as their incomes sit only a small margin above the subsistence threshold,” it said.
Citing regional estimates, the UNDP said a prolonged shock could push more than 35,000 Filipinos below the lower-middle-income poverty threshold of $4.20 per day, while other projections place the number of newly poor at between 1.34 million and 3.5 million under different scenarios.
The agency also cautioned that fiscal and policy trade-offs are becoming more difficult, as government efforts to contain inflation may limit spending for health, education, and social protection.
To cushion the impact, the UNDP urged sustained macroeconomic stability, stronger energy security, expanded social protection programs, and targeted support for jobs and livelihoods in vulnerable sectors.
“The guiding principles of the response should therefore be to build resilience, to protect the most vulnerable, and to use and strengthen existing systems rather than new designs,” the UNDP said.
It also stressed that short-term relief should not delay structural reforms.
“The response should not crowd out the structural reforms in energy, food systems and social protection that would reduce the country’s exposure to the next shock,” it added.
