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Progress and threats

According to the Washington-based World Bank’s latest “East Asia and the Pacific Economic Update,” growth forecasts for the Philippines were revised on expectations of “more robust” domestic demand, while also seeing a drop in the poverty rate. However, it also flagged the country’s vulnerability to the labor displacement effect of artificial intelligence (AI), which may affect the relationship between growth and job dynamics.

The WB update said further improvements in the local job market and easing of inflation would boost family incomes and help beat poverty. Using its own metrics, the multilateral lender said in a separate report that poverty incidence is projected to fall to 13.6 percent this year and even to 11.3 percent in 2026, from 17.8 percent in 2021. That would put the government closer to its goal to slash the poverty rate to 9 percent by 2028.

However, WB said the Philippines, Thailand, and Malaysia are “relatively more exposed” to AI-induced job losses compared with other countries in the region due to their “higher engagement in cognitive services sectors” like customer service.

Women are also more vulnerable to AI’s displacement effect than men, especially in the Philippines and Malaysia, WB said.

At a press conference, Aaditya Mattoo, chief economist for East Asia and the Pacific at WB, said lower wages in the Philippines compared with advanced economies would help secure jobs in the local business process outsourcing sector, where AI adoption is increasing.

While we may be able to stave of the threat posed by AI to jobs for at least a few years, preparations have to be made to allow those who will be affected to pivot or to soften the blow, as the continued employment of Filipinos will be a crucial factor in any sort of sustainable economic growth and progress.

Artificial intelligence has pros and cons, and knowing those isn’t enough, especially when millions of livelihoods are possibly at stake as the technology matures and use becomes widespread. As early as possible, those responsible for the sectors that are expected to be most affected need to come up with plans and alternatives to ensure that we get more of the good from AI, and less of the bad.*

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November 2024
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