After the World Bank announced that the Philippines had finally progressed from a lower-middle income to an upper-middle income country, a common remark was, “I’m not upper-middle income.”
The status was attained after Gross National Income per capita in 2025 hit $4,850. This was within the GNI range of $4,636 to $14,375 for upper-middle income classification set by the World Bank.
GNI is based on gross domestic product together with remittances of overseas Filipinos, minus income earned by foreigners and multinational companies that are sent out of the country. The total, divided by the national population, is the GNI per capita and the basis for the World Bank’s income classifications.
Hefty remittances from overseas Filipinos helped the country move out of lower-middle income classification after 40 years. Economic officials themselves, however, acknowledge that the improved classification does not reflect income disparities.
Making economic growth equitable and having the benefits trickle down to the grassroots have been long-standing challenges in this country where power and wealth – often interlinked – are controlled by only a tiny fraction of the population.
Self-rated poverty has been consistently high in surveys, with 52 percent of families describing themselves as “poor” in the latest poll taken last March by Social Weather Stations.
Some analysts have warned that the economic slowdown could expand the ranks of the poor, with those in the lower middle class slipping into poverty.
To promote equitable growth, development planners have emphasized the importance of attracting businesses that create meaningful jobs, along with substantial investments in building human resource capabilities through quality education, health care and continuing upskilling of the workforce.
Attracting investments alone, however, has been an uphill climb, and over the years the country has been left behind in this area by most of its regional neighbors.
On top of inadequate infrastructure and the high costs of power and logistics, investors complain of red tape, corruption, rent-seeking, uneven regulation and weak rule of law.
The continuing crisis in the Middle East and the economic slowdown due to a freeze in public spending arising from the flood control corruption scandal pose further challenges to growth and narrowing of the income gap.
Unless these challenges are addressed, that upper-middle income status will be meaningless for millions of Filipinos.