The Philippines has been reclassified as an upper-middle income country (UMIC) by the World Bank, a milestone that President Ferdinand R. Marcos Jr. hailed as a testament to the country's economic progress.
In a video message, the President expressed his delight at the reclassification, citing the country's steady economic growth, stable currency, and long-term reforms as key factors that have strengthened its economy even in the face of global uncertainties.
The World Bank's latest country income classification showed that the Philippines posted a record gross national income (GNI) per capita of $4,850, lifting it into the upper-middle income category, which has a GNI per capita ranging from $4,636 to $14,375.
Economists, however, cautioned that slowing growth could threaten the country's ability to retain the UMIC status. Associate Professor Francisco Cid L. Terosa noted that the Philippines remains close to the lower end of the World Bank's GNI per capita range for upper-middle income economies, exceeding the UMIC threshold by just $214.
Terosa also warned that geopolitical events and related consequences could bear down on the country's classification, while GlobalSource Partners Philippine Analyst Diwa C. Guinigundo emphasized the need for the Philippines to sustain its upper-middle income classification in the years ahead.
The country's economic managers expect GDP to grow by 3.5-4.5% this year, and by 5-6% from 2027 to 2030. However, recent economic data suggest that risks to the country's UMIC status, including weaker productivity and employment, are beginning to materialize.
The Department of Economy, Planning, and Development (DEPDev) Secretary Arsenio M. Balisacan acknowledged that income disparities persist, and many continue to face economic difficulties. He said the government's priority is to ensure that growth becomes more inclusive, and that its benefits reach all Filipinos.
Meanwhile, economists noted that the reclassification is likely to reduce the Philippines' access to concessional financing over time, as eligibility for some World Bank and multilateral lending facilities is linked to income classification.
However, experts said that the transition to market-based financing and private capital is unlikely to constrain public investment in the near term, and that stronger investor confidence associated with upper-middle income status could help offset the gradual decline in concessional financing.
Chinabank Research noted that any reduction in access to concessional financing is unlikely to happen immediately, and that lower market rates could help offset the loss of some concessional financing, keeping the funding of key government programs and infrastructure projects manageable.
The country's strengthened fiscal position and favorable access to domestic and international capital markets are expected to help offset the gradual decline in concessional financing, and in the medium term, the net impact is likely to be positive if fiscal discipline and structural reforms continue to be implemented consistently.
