While the Philippines’ climb to upper-middle-income-country (UMIC) status is attainable in the medium term, the country will be surpassed by neighboring Vietnam, which would jump to become a high-income economy 15 years from now, according to Singapore-based DBS Bank Ltd.

The Philippines, Indonesia, Malaysia, Singapore, Thailand, and Vietnam—collectively known as the Association of Southeast Asian Nations (ASEAN)-6—is expected to become the world’s fourth-biggest economy by 2030, according to a July 29 report authored by DBS Group Research senior economists Han Teng Chua and Radhika Rao.

DBS cited that ASEAN-6’s nominal gross domestic product (GDP) has quadrupled over the past two decades, driven by strong domestic demand, investment, and export tailwinds.

The Singaporean bank projected that from 2025 to 2040, ASEAN-6 would grow at an average real GDP rate of 4.8 percent, outpacing China, with growth fueled by capital investment and productivity gains.

“Most of ASEAN-6, including Indonesia, Malaysia, and Thailand, are currently in the upper-middle-income status, according to the World Bank, while the Philippines and Vietnam lag as lower-middle-income countries. Singapore, which is in the high-income status, is by far the most developed and wealthiest economy in the region,” DBS noted.

“By 2040, our forecasts imply that rapidly developing Vietnam, together with Malaysia, will potentially join Singapore as high-income countries, while the Philippines would have transitioned to upper-middle-income status,” joining Indonesia and Thailand, the bank said.

As Manila Bulletin first reported, the latest World Bank data has shown that Vietnam’s gross national income (GNI) per capita in 2024 reached $4,490—not only eclipsing the Philippines’ $4,470 but also much closer to the Washington-based multilateral lender’s UMIC threshold of $4,496 to $13,935 for fiscal year (FY) 2026.

Starting this year until 2040, Vietnam and the Philippines are seen topping economic growth in ASEAN-6—both forecast by DBS to average six percent during the 15-year period. Indonesia is expected to grow by an average of 5.6 percent in the next 15 years; Malaysia, 4.2 percent; Singapore, 2.3 percent; and Thailand, 2.2 percent.

“Services are a significant part of the Philippines’ economy, besides manufacturing activity. Positive demographics, and a young population are few of the country’s medium-term strengths. For the external sector, strong presence in business process outsourcing (BPO), and tourism coupled with electronics, are key positives,” DBS said.

Besides the demographic dividend—a median age under 30 years—that would jack up household savings, plus a strong services sector, DBS also pointed to strong inward remittances from the Filipino diaspora as one of the country’s strengths.

However, the bank flagged infrastructure gaps, income inequality, as well as politics among the Philippines’ weaknesses.

“The Philippines is coming off few years of infrastructure development, with more public sector commitments required in this sector,” it said.

To leverage on expectations of robust economic growth during the next 15 years, DBS urged the Philippines to strengthen its digital economy, become more active in free-trade agreements (FTAs), and ramp-up investments in renewable energy (RE).

While Philippine growth would likely outpace ASEAN-6 until 2040, DBS cautioned against threats posed by a global economic slowdown, the country being a regional laggard in attracting fresh foreign direct investments (FDIs), as well as the Philippine peso’s volatility.

Across ASEAN-6, DBS said that the region is expected to remain energized in the next 15 years, driven by domestic momentum, rising intra- and extra-ASEAN trade, and stronger ties with China, India, and other regions.

For DBS, key to sustaining ASEAN-6’s growth will be capital market development, private sector engagement, green transition efforts, and digital economy expansion.