2 days ago
World Bank sees upper-middle income status for PH in 2027
The Philippines' elevation to upper-middle income economy (UMIC) status might take longer than expected as global uncertainties put pressure on the country's economic growth, according to Washington-based multilateral lender World Bank.
'The UMIC status is actually an inevitability; it will happen. The question is when? Is it possible to happen in 2026? It's possible, [but] we really think… that it will take a little bit longer. Probably, it will happen in 2027,' World Bank lead economist Gonzalo Varela said at a press conference in Makati City on Thursday.
'With the economy growing a little bit slower than we thought in the past six months, it will take a little bit longer,' Varela said.
Nonetheless, World Bank senior country economist Jaffar Al-Rikabi said that 'it is far less important exactly which date it will [happen]… the country graduates in this somewhat arbitrary threshold.'
'Much more important is that the economy continues to grow and continues to create good jobs,' Al-Rikabi said.
The Philippines remains a lower-middle income economy, as its gross national income (GNI) per capita at $3,950 in 2022 fell within the World Bank's bracket for lower-middle-income economies, $1,136–$4,465, which was raised from $1,086–$4,255 a year ago.
GNI per capita measures the country's total income divided by its population.
For fiscal year 2024, the World Bank classifies low-income economies 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; and high-income economies are those with a GNI per capita of $13,845 or more.
Currently, the Philippines is joined in the lower-middle income bracket by Vietnam ($4,010 GNI per capita), Laos ($2,360), Cambodia ($1,700), and Myanmar ($1,210).
It trailed behind its neighbors, which are in the upper-middle income level: Malaysia ($11,780), Thailand ($7,230), and Indonesia ($4,580).
Singapore ($67,200) and Brunei ($31,410) are in the high-income bracket.
The Marcos administration's chief economist, Economic Planning Secretary Arsenio Balisacan, earlier expressed confidence that the country would graduate to UMIC status by 2026, as he was optimistic that the economy would expand by 6% for the entire 2025.
The economy grew by 5.4% in the first quarter of 2025.
In the June 2025 edition of its Philippines Economic Update, the World Bank is projecting that the Philippine economy—as measured by gross domestic product (GDP)—will grow by 5.3% in 2025, slower than the actual economic growth rate of 5.7% seen in 2024 and also below the low end of the government's goal for the year (6% to 7%).
Al-Rikabi said that the conservative growth projection was due to ''global policy uncertainty.''
'The impact of what's happening externally has resulted in exports doing less well, services growth decelerating, and industry decelerating,' Al-Rikabi said.
In its report, the multilateral lender highlighted that 'escalating regional conflicts may result in elevated commodity prices and impact global shipping and logistics prices.'
The World Bank also issued policy and structural reform recommendations for the Philippines to support its medium-term growth:
Tax reforms, including closing tax policy and compliance gaps to increase the tax-to-GDP ratio
Reforms to improve efficiency of expenditure—including strengthening public financial management, public procurement, and public investment management
Lowering deficits in line with the medium-term fiscal framework
Invest in the infrastructure foundation necessary for jobs—with a focus on connectivity infrastructure and skills gaps.
Streamline business regulations and improve the business environment.
Mobilize private capital to complement public funds.
'The Philippines would benefit from fiscal reforms to support medium-term stabilization and structural reforms to safeguard and accelerate growth,' Al-Rikabi said.
'Boosting private growth and job creation can help the Philippines mitigate the impact of global policy uncertainty,' he said. —VBL, GMA Integrated News
