Philippines to become upper middle income country this year

MANILA, Philippines — The Philippines is poised to become an upper-middle income economy this year, three years ahead of the government’s targeted schedule, according to the Department of Finance (DOF).

With the strong resilience of the Philippine economy and the support of the World Bank, Finance Secretary Carlos Dominguez expressed confidence that the country is on track to hitting the per capita income threshold to be classified as an upper middle income economy this year.

“For many decades, the World Bank helped many emerging economies achieve sustainable development. This year, as the bank celebrates its 75th year, we are proud to announce that the Philippines will achieve the status of an upper middle-income nation ahead of schedule,” Dominguez said during the recent Philippine Day Forum held at the sidelines of the International Monetary Fund-World Bank meetings in Washington, DC.

Under the Philippines’ medium term development plan, the government aims to transform the country into an upper middle-income status by 2022. The World Bank puts upper middle-income economies as those that have a gross national income (GNI) per capita of between $3,896 and $12,055.

Socioeconomic Planning Secretary Ernesto Pernia has expressed confidence that the Duterte administration would be able to achieve this goal as early as this year.

According to Dominguez, the Philippines today is one of the fastest growing economies in the world, expanding at an average of 6.5 percent in the first 10 quarters of the Duterte administration.

He said the country posted a gross domestic product (GDP) growth rate of 6.2 percent in 2018 despite uncertainties caused by a looming trade war, as well as a spike in world oil prices and domestic inflation.

“Reaching this milestone in our development story is attributable to many years of hard work – especially in building a strong fiscal position and a bureaucracy honed to the task of catalyzing growth,” he said.

The finance chief also cited the strong political will of President Duterte in delivering reforms, including tax reforms, improvements in the ease of doing business, a more transparent and responsive government, increased investments in human capital, and enhancement of peace and order.

Dominguez said these are demonstrated by the decrease in crime volumes, the establishment of the Bangsamoro Autonomous Region for Muslim Mindanao, the Comprehensive Tax Reform Program (CTRP), and the Build Build Build program.

Moreover, he said the Duterte administration has initiated other reforms, such as the passage of the New Central Bank Act and the Rice Tariffication Act, the establishment of a national ID system, and the creation of new platforms to minimize the cost of doing business.

“These reforms should translate into even stronger resilience as we face the challenges of this year. Those challenges include the projected slowdown in global economic growth and rising fears of recession in the major industrial economies. By striving to make our economy more inclusive and our governance more responsive to the waves of technological change, we strive to continue building on our growth momentum,” Dominguez said.

The government is targeting to achieve a GDP growth rate ranging from six to seven percent this year.