Assessing the Impact of the Asian Financial Crisis and El Niño on Poverty in the Philippines
Author: Jose Ramon G. Albert, Ph.D.
The 1997 Asian Financial Crisis took a toll in the economy and living conditions of several countries in the region. This crisis, coupled with the El Niño phenomenon in 1998, adversely affected the Philippines in particular and shifted many Filipino households into poverty. While researchers argued that the concurring events had minimal impact to the Philippine economy in general, there is still an observable impact in the country’s poverty indicators and even in the living situation of many Filipinos. To assess the impact of the Asian Financial Crisis and El Niño phenomenon in the Philippine economy and poverty indicators, the study evaluated quarterly seasonally adjusted macroeconomic variables collected from national income accounts, labor measures, and monetary indicators. Macroeconomic indicators included relevant country measures such as Gross Domestic Product and Foreign Exchange Rates. On the other hand, poverty measures were evaluated using panel data from the 1997 Family Income and Expenditure Survey (FIES), October 1997 to July 1998 Quarterly Labor Force Survey (LFS), and the 1998 Annual Poverty Indicators Survey (APIS). Classification and regression trees were aptly utilized to gauge the impact of the financial crisis and El Niño phenomenon to the country’s poverty indicators. Through intensive analysis of each of the indicators before and after the occurrence of the Asian Financial Crisis and El Niño phenomenon, the study concluded that these events had negligible impact to the country’s macroeconomic indicators. However, disaggregating the analysis by sector reveals otherwise. Some sectors experienced more damaging effects of the two phenomena.