EDITORIAL - Upper-middle income status

After four decades of being a lower-middle income economy, the Philippines has attained upper-middle income status, according to the World Bank.

Hailed as a vote of confidence in the country, the new classification was attained after the Philippines’ gross national income per capita in 2025 rose to $4,850 – within the upper-middle income GNI range of $4,636 to $14,375.

While the new classification sends a positive signal that the country is making meaningful economic progress, even government officials have admitted that it does not reflect the wide income disparities across the country and the realities for many struggling families.

In the survey on self-rated poverty taken by pollster Social Weather Stations in March this year, a high 52 percent of Filipino families – about 14.5 million – rated themselves as poor and 13 percent as “borderline” poor.

Also, that’s just a narrow gap between $4,850 and the minimum GNI range of $4,636. Unless measures are implemented to sustain and even raise the GNI per capita, there’s the risk that the country could slip back to lower-middle income status – its classification since 1987.

The improved classification also means the country may no longer be eligible for concessional loans and preferential tariffs. There will be a three-year period for transition and review of the billions in preferential tariffs and official development assistance for which an upper-middle income economy may no longer be eligible. Whether the country is prepared to lose all that ODA will depend on the implementation of reforms.

Officials of the Department of Economy, Planning and Development say that sustaining the classification calls for several measures. One is to ramp up spending especially in the public sector. Another, according to DepDev, is to invest in the country’s human capital, through upskilling and improved quality of education, with innovation driving economic growth.

More investments are needed in research and development, and technology particularly homegrown must be tapped to boost national productivity, according to DepDev officials.

The Management Association of the Philippines urged the government to “use this momentum to accelerate reforms that improve ease of doing business, attract high-value investments, raise productivity and strengthen our competitiveness so that economic growth becomes more inclusive and widely felt.”

“The real measure of success is whether this milestone translates into more quality jobs, higher incomes and better opportunities for ordinary Filipinos,” MAP said.

After four decades of being a lower-middle income country, the improved classification is a welcome development. The mood is cautious optimism, anchored on the commitment to meaningful reforms.