The country’s socioeconomic planning agency remains positive that the Philippines will become an upper middle-income economy by next year.
National Economic and Development Authority Arsenio M. Balisacan said that the country remains on track to achieving an upper middle-income status in 2025 which may be attributed to a higher economic growth, as measured by gross domestic product (GDP), and slow population increase.
“The numbers are pointing at an upper middle-income status by next year if we achieve at least six percent growth of GDP, and by all indications, I think that six percent should be doable,” Balisacn told reporters.
“And there's another positive factor that we saw recently in terms of population, population numbers are actually lower, while the latest census we had showed slower population growth,” he added.
Being an upper middle-income country is to have a gross national income (GNI) per capita income range of $4,466 to $13,845 as measured by the country’s final income in a year and its population.
As per writing, the World Bank categorizes the Philippines as a lower middle-income country with a GNI per capita of $3,950.
The Marcos administration aims to bring the Philippines to "upper-middle income status by 2024" as also aligned with the World Bank’s target.
For the current 2024 fiscal year, low-income economies are categorized as those with a GNI per capita of $1,135 or less in 2022; lower middle-income economies are those with a GNI per capita between $1,136 and $4,465; upper middle-income economies are those with a GNI per capita between $4,466 and $13,845; high-income economies are those with a GNI per capita of $13,846 or more.
Meanwhile, the country’s ASEAN-4 neighbors Malaysia, Thailand, and Indonesia have per capita incomes of $11,700, $7,200 and $4,900, which all lie in the upper-middle-income category.
Cut poverty rate
Before becoming an upper-middle-income country, the Philippines is urged to address its poverty rate first.
According to a report by French Development Agency (AFD) Country Risk Economist Benoît Jonveaux, the country remains below its ASEAN neighbors in terms of per capita GDP in purchasing power parity.
“In 2022, it was 50 percent lower than in Indonesia, 30 percent lower than in Vietnam, and almost two times lower than in Thailand,” he said.
“Similarly, the path towards poverty reduction (although there has been a sharp decline in poverty) and human development falls slightly below neighboring countries,” the report reads.
The poverty rate in the country was still at 18.3 percent in 2019 but was still lower than 35.3 percent in 2010, based on the World Bank threshold for lower middle-income class countries.
However, the country’s poverty rate remains below compared to Vietnam at 5.3 percent and Thailand at 1 percent, based on the report.
To resolve this, the report cited the need to address access to financing, the relatively low productivity of workers, and the cost of electricity, which is the highest in the ASEAN region after Singapore.
It also noted the need to address the country's governance as the "World Bank’s governance indicators on the rule of law, corruption, and government effectiveness have also declined since 2016 and are in the bottom half of the institution’s global rating."