President Ferdinand Marcos Jr.’s chief economic manager said that achieving upper-middle-income country (UMIC) status is definitely attainable by the end of 2025 or 2026, citing the still expansionary national budget planned for next year to stimulate the economy.

“Surely, we will attain UMIC status by the end of the year or next year,” Department of Finance (DOF) Secretary Ralph G. Recto told Manila Bulletin on Wednesday, July 2, when he was asked if he believes the country can finally escape the lower-middle-income trap by next year and climb to UMIC status.

Recto’s statement took off from the Washington-based World Bank’s report that the Philippines’ gross national income (GNI) per capita stood at $4,470, setting a record high. Last year’s GNI per capita stood closer to the multilateral lender’s lowered UMIC threshold of $4,496 to $13,935 for fiscal year (FY) 2026, due to the United States (US) dollar’s appreciation versus other currencies.

According to the World Bank’s latest country income classification, the Philippines remained classified as a lower-middle-income country (LMIC). LMICs are those whose GNI per capita ranged between $1,136 and $4,495 in 2024.

While the country’s GNI per capita last year was within the Philippine Development Plan (PDP) 2023-2028’s goal of $4,454-$4,592 for 2024 it still fell behind Vietnam’s $4,490.

In the coming years, the government aims to raise full-year GNI per capita to $4,814-$4,920 by 2025, $5,256–$5,563 by 2026, $5,645–$6,056 by 2027, and $6,044–$6,571 by 2028, under PDP 2023-2028, which serves as the Marcos administration’s medium-term socioeconomic blueprint.

GNI measures the total income generated by a country’s residents, both domestically and abroad, making it a broader indicator of economic performance than gross domestic product (GDP), which only accounts for local output.

Recto acknowledged the persisting threats from the external environment and their beyond-control shifts. “Clearly, there are many external challenges and so much unpredictability,” he said. Among the global challenges are the ongoing tensions in the Middle East and the US tariff measure, whose three-month suspension is set to end next week.

These pressures have been taken into account in the budget process, according to the Finance chief. “That is why the budget next year is still expansionary. It promotes growth, employment and poverty reduction. It supports investments in infrastructure and human capital,” Recto told Manila Bulletin.

Last June 26, the Cabinet-level Development Budget Coordination Committee (DBCC) approved a record-high ₱6.79-trillion national budget for next year, with a focus on social services. Data showed that next year’s budget—equivalent to 22 percent of the country’s economic output—has increased by 7.4 percent from this year’s budget of ₱6.32 trillion.

To attain the long-dreamed UMIC status, Recto said that the Marcos administration “will endeavor to keep inflation within target and further reduce interest rates to support both consumption and investments” in light of external challenges.

To date, the key interest rate has been slashed by a total of 1.25 percent to 5.25 percent from 6.5 percent before monetary policy easing was started in August last year. Markets expect at least another quarter-point cut before year-end.

May’s 1.3-percent headline inflation was the slowest in five-and-a-half years, but the Bangko Sentral ng Pilipinas (BSP) raised its inflation projection to nearly two percent due to elevated oil prices and the recent depreciation streak of the Philippine peso.

Earlier, the World Bank said the Philippines is on track to achieving UMIC status, but this may be delayed until 2027 due to spillovers from ongoing tariff-driven global trade tensions and the uncertainties linked to it.