PH to Reach Upper-Middle Income Status Later than 2025, Says World Bank

PH to Reach Upper-Middle Income Status Later than 2025, Says World Bank

File photo shows the World Bank Group building as viewed on an empty street in Washington, DC on April 13, 2020. Daniel Slim/AFP

The Philippines is projected to achieve upper-middle income economy status later than the government’s target of 2025, according to a senior economist at the World Bank.

Growth Rate Projections

“We do expect that the Philippines at its current growth rates is expected to cross the threshold in the next few years… it could be in the next, say, two to three years,” World Bank senior economist for the Philippines Ralph Van Doorn told reporters at a press briefing in Taguig City on Tuesday.

While the government remains optimistic about achieving upper-middle income status by 2025, banking on an economic growth target of 6% to 7%, Van Doorn suggests it might take a bit longer.

“Yeah. We expect it to be in the next few years, maybe in two to three years. It’s difficult to project exactly because we don’t know whether the threshold will be adjusted,” Van Doorn explained, noting that the income status threshold is constantly adjusted.

Economic Indicators

As of 2022, the Philippines remained classified as a lower-middle income economy under the World Bank’s latest classification, with a gross national income (GNI) per capita of $3,950. This falls within the bracket for lower-middle income economies of $1,136 – $4,465, up from $1,086 – $4,255 the previous year.

Philippine Statistics Authority data showed the country’s GNI per capita (at current prices) stood at PHP 241,165 in 2023, a 14.7% increase from PHP 210,228 in 2022.

World Bank Classifications

For fiscal year 2024, the World Bank classifies economies based on GNI per capita:

• Low-income economies: $1,135 or less
• Lower middle-income economies: $1,136 to $4,465
• Upper middle-income economies: $4,466 to $13,845
• High-income economies: $13,846 or more

“The Philippines has been close to the threshold of becoming an upper-middle income country already pre-pandemic, but then the growth contraction threw it off track,” Van Doorn noted.

Implications and Risks

“Becoming an upper-middle income country doesn’t have any kind of concrete effects, other than the fact that the country will now be compared against a different group of countries. And it would be good for the government to start using those benchmarks to set the ambitions even higher,” Van Doorn said.

He emphasized that the risks of not achieving upper-middle income status are linked to overall growth and global conditions. However, he remains optimistic about the Philippines’ growth trajectory. “The Philippines’ growth has been steady and resilient, and we expect GDP per capita to continue increasing quite rapidly. This will lead to attaining this status in the next few years,” he said.

Regional Comparisons

Currently, the Philippines is in the lower-middle income bracket, along with Vietnam ($4,010 GNI per capita), Laos ($2,360), Cambodia ($1,700), and Myanmar ($1,210). It trails neighbors in the upper-middle income bracket, including Malaysia ($11,780), Thailand ($7,230), and Indonesia ($4,580), which recently moved up from lower middle income status. High-income countries in the region include Singapore ($67,200) and Brunei ($31,410).