Banish the thought that the World Bank's classification of the Philippines as an “upper-middle-income” economy is the silver bullet to slay the dragon of widespread poverty. It is a myth—not reality. Find out why.

From 1987 to 2025—spanning almost four decades—the Republic of the Philippines has been stuck as a “lower-middle-income” economy. While the post-Marcos Sr. era generally yielded better gross domestic product (GDP) growth rates, population growth remained a heavy counterweight. In the 1950s and 1960s, the population growth rate hovered between three percent and four percent; from 1965 to 1975, it was 2.2 percent to 3.1 percent; and by the 2020s, it slowed to 0.8 percent to 1.1 percent.

A rising GDP combined with a falling population growth rate did indeed help achieve a higher GDP per capita.

According to the World Bank, Philippine per capita income in 2025 registered at $4,850 (up from $4,470 in 2024), eclipsing the $4,636 threshold and triggering the reclassification. Department of Economy, Planning, and Development (DEPDev) Chief Arsenio Balisacan claims that the Philippine GDP growth rate averaged 5.8 percent from 2021 to 2025.

Nominal GDP rose steadily from 2023 (₱24.3 trillion) to 2024 (₱26.4 trillion) and 2025 (₱28.0 trillion), while the population grew at a slower pace from 2023 (115 million) to 2024 (116 million) and 2025 (117 million). Population growth rates for those same years were 0.81 percent, 0.83 percent, and 0.80 percent, respectively—all under one percent annually.

To put this into perspective, smaller nations like Micronesia and Sri Lanka share this “upper-middle-income” classification, while Indonesia, despite having double the population of the Philippines, boasts a far higher GDP per capita at $5,700.

If the World Bank's mathematical aberration were Gospel truth, then the average man on the street would be earning ₱24,654 a month—the peso equivalent of a $4,850 annual income. You know that is not true, especially if you interview utility drivers, salespersons, and farmers in rural areas. This reality is driven by a massive income distribution disparity.

It means the total national income is far from equally shared among 117 million Filipinos. That is why you see Philippine tycoons breaking into the “world's richest” lists year after year, while millions remain impoverished. In fact, the government's own Philippine Statistics Authority (PSA) figures place the “official poverty incidence” at 15.5 percent, or roughly 17.5 million Filipinos.

Even worse, a Social Weather Stations (SWS) survey conducted on June 25–28, 2025, disclosed that 49 percent of Filipinos consider themselves “poor” (mahirap), translating to 13.7 million families or about 55 million individuals. This high “poverty perception” occurs when Juan de la Cruz faces ever-rising prices, mounting debt, future insecurity, and zero budget for emergencies—all while witnessing the ostentatious wealth of neighbors and the opulence flaunted on social media.

According to the Organisation for Economic Co-operation and Development (OECD), income inequality in the Philippines is starkly higher than in our ASEAN neighbors like Indonesia, Thailand, and Vietnam. Mathematical formulations confirm this.

Take the Gini coefficient, where zero represents perfect equality and one means a single person receives a country’s entire income. The Philippines recently scored 0.482—a glaringly high income disparity. Meanwhile, the Palma Ratio recently pegged the Philippines at 1.26, which means the richest 10 percent of Filipinos earn 26 percent more total income than the poorest 40 percent combined. Digest that.

Keep in mind that these are merely income measures. They do not account for the gross inequality in asset ownership—land, businesses, dividends, and stocks—the very vehicles that enhance one’s ability to generate more wealth. Ultimately, the rich get richer, and the poor get poorer.

Because the Philippines is now theoretically “less poor,” this new classification actually reduces our access to concessional development assistance and lower-interest loans from multilateral institutions—the very funds we rely on to balance our budget and fiscal deficit.

Balisacan argues that this upgrade will boost our credit profile, attract private sector investor confidence, and ultimately create better-paying jobs. We kindly beg to differ.

“Ali-shuffle” mathematical classifications like this, whether from the World Bank or elsewhere, ignore a stark reality: the drop in government spending, the lack of investor capital, and the hesitancy of both businesses and consumers to spend are driven by a fundamental lack of confidence in good governance and accountability. This points to a dim future.

Unless crooks are jailed, the business environment is genuinely enhanced, and budget utilization loopholes are plugged, World Bank classifications are mere icing on a cake that remains completely unpalatable.